An automotive manufacturing plant was facing increasing pressure to reduce operational costs and improve efficiency in its supply chain. One of the key areas of concern was the sheer number of vendors supplying various materials and products to the plant. This not only complicated inventory management but also made cost control more challenging. The plant’s operations team needed a solution that would streamline vendor management while delivering measurable cost savings.

We implemented a vendor-managed inventory (VMI) system in the plant’s storeroom, consolidating purchases under one vendor to streamline procurement and ensure critical parts were always in stock. The VMI system included:

• Inventory Control: Automatically monitoring and replenishing stock as needed.
• Single Purchase Order: Simplifying procurement with one purchase order for all materials.
• Delivery Efficiency: Consolidating deliveries into one weekly shipment to save time.

We partnered with Lawson Products for the successful implementation.

The VMI system was successfully implemented in the storeroom, and the results were immediate and measurable. The plant achieved hard cost savings of $60,000 in the first year of the program. These savings were driven by:

• Reduced administrative overhead from managing fewer vendors.
• Lowered procurement costs through consolidated purchasing.
• Decreased carrying costs due to optimized inventory levels.

Additionally, the implementation of weekly deliveries and a single purchase order streamlined the plant’s supply chain, reducing the time spent on logistics coordination and allowing the operations team to focus on more strategic initiatives.

Significant Cost Savings: The vendor-managed inventory (VMI) system saved the plant $60,000 in the first year by reducing administrative and procurement costs.

Streamlined Procurement: Consolidating all materials under a single vendor simplified inventory management, with a single purchase order and optimized weekly deliveries.

Operational Efficiency Gains: The VMI system reduced logistical coordination efforts, enabling the operations team to focus on strategic initiatives.