Vendor managed inventory (VMI) is rapidly catching on and has become an excellent way for OEMs to control costs and supply chain interruptions. By allowing Sweeney Metal Fabricators to build larger quantities of your product you can expect:
• Shorter overall lead times
• Reduced costs
• Increased quality
Sweeney Metal Fabricators offers two different options for VMI. Both are designed to save you time and money. Here is an overview of our two offerings with their advantages and potential drawbacks:
In a standard min/max agreement, you (the customer) dictate the maximum quantity of a product you want to be responsible for, and the minimum you require us to have on hand. The advantages of this program are cost and lead time reduction, as well as low exposure on your part. This option usually works well for a product through the initial production run, with only minor revision changes in the foreseeable future.
Another advantage of this program is the low exposure if a major revision is needed. The disadvantages come into play when you see a spike in customer requirements that go beyond the minimum levels. Once that happens, the production clock starts again, and minimum levels are reached within standard, predetermined production times.
In a blanket order agreement the risk may increase, but so will the savings. If we are building 5 units per month for you for 10-12 months out of the year, and your product is revision stable, it is time to move up to a blanket agreement.
Once we enter into this agreement, you agree to purchase a full year’s worth (or more) of your product at production pricing. Once the agreement is established a forecast is developed based on your input and purchase history. We then are able to manufacture your product in higher quantities and schedule larger orders through our shop and our vendors. We then place your product on the shelf until you need it.
The advantages of this method are price and lead time. When you go from 5 pieces monthly to 60-100 pieces per year, your product pricing can see a huge drop, not to mention the confidence in knowing that you have a year's worth of product available to build when that large customer order rolls in! The major disadvantage is the exposure. Once you agree to building larger quantities, you agree to receive them at the revision levels agreed to. Of course, we can always incorporate rev changes during production but it can be a costly process that can often lead to scrapping the parts. This is a rare occurrence, but it can happen.
With both of these programs, you only pay for what is delivered to you. We do not invoice anything upfront. We only ask that you take 100% of the product within the agreed upon term.
Contact us today for a free, no obligation analysis of your requirements, and let us show you how we can help to improve your bottom line!