What is vendor managed inventory?

Vendor managed inventory is an arrangement in which the customer owns the stock and the supplier keeps it at the right level. The supplier watches the stock at the customer's site and refills it before it runs low, so the customer does not have to place routine orders.

How does the supplier see the stock at the customer's site?

With the BizBloqs VMI module, the supplier gives its customers scanners. The customer scans stock in when it arrives and out when it is used, with batch and expiry date. BizBloqs keeps the stock per customer site from those scans.

What happens in a recall?

The supplier blocks the batch in BizBloqs. A blocked batch can no longer be used, so it is stopped at every customer site at the same moment, and the supplier can see where it still sits.

Not with this module. The stock data comes from the scans at the customer's site, so the customer needs a scanner, not an EDI connection.

Vendor managed inventory software

In brief

In vendor managed inventory (VMI), the customer owns the stock and the supplier keeps it at the right level. Under consignment, by contrast, the supplier owns the stock until it is used.
With the BizBloqs VMI module, the supplier gives its customers scanners. The customer scans stock in and out, with batch and expiry date.
BizBloqs then manages the stock at the customer's site: reorder levels, warnings before goods expire, and batch blocking.
A blocked batch can no longer be used. In a recall, that stops a suspect batch at every customer site at once.
Under the EU Falsified Medicines Directive rules, a medicine pack carries its batch number and expiry date in a 2D Data Matrix code, so one scan captures both.

Who it is for

Suppliers and distributors, in pharma and in other sectors with batches and expiry dates, who keep stock on their customers' shelves and want to see and steer it from their own system. Not for you if your customers order on their own judgement and you never see their stock.

Under vendor managed inventory, the customer owns the stock and the supplier keeps it at the right level. Under consignment, the supplier owns the stock until it is used. This page is about the first: stock that belongs to your customer, on your customer's shelf, that you are responsible for keeping full.

That responsibility only works if you can see the shelf. Most VMI arrangements fail on exactly that point. The supplier works from a spreadsheet the customer sends once a week, or from a guess, and finds out about an empty shelf when the customer calls.

Give your customers a scanner

The BizBloqs VMI module starts at the customer's site. As the supplier, you give your customers scanners. When goods arrive, the customer scans them in. When goods are used, the customer scans them out. Every scan carries the batch number and the expiry date.

You do not need an EDI connection with each customer, and the customer does not need a warehouse system of its own. A scanner and a habit of scanning are enough.

For medicines, the batch and the expiry date are already on the pack. Under the EU rules for safety features on medicines, every pack carries a unique identifier in a two-dimensional Data Matrix code: a product code, a serial number, the batch number and the expiry date. BizBloqs reads GS1 DataMatrix codes, so one scan of the pack captures what the customer would otherwise have to type.

FIGURE 1VMI with scanners at the customer's site

Scroll sideways to see the whole figure.

VMI: the customer owns the stock, the supplier keeps it at the right level. Consignment: the supplier owns the stock until it is used.

You manage the stock at their site

From those scans, BizBloqs holds the stock per customer site, and you manage it from your own system:

Reorder levels. Each product at each site has a level. When stock drops towards it, you see it and refill before the shelf is empty. The reorder point calculator helps you set a sensible level.
Expiry warnings. Goods close to their expiry date are flagged, so you can swap them or move them to a site that will use them first, instead of writing them off.
Batch blocking. You can block a batch. A blocked batch can no longer be used at any site.

Why batch blocking matters in a recall

A recall is where VMI earns its keep. When a batch has to come back, a supplier without VMI phones every customer and hopes the batch has not been used in the meantime.

With batch blocking, you block the batch once in BizBloqs. From that moment it can no longer be scanned out for use at any customer site, and because every site scanned the batch in, you can see exactly where it still sits. The recall becomes a list of sites to visit rather than a round of phone calls.

The module is used by pharmaceutical suppliers, where batch and expiry control are not optional. The same approach suits any sector with batches and expiry dates. See the pharmaceuticals page for the wider picture in that sector.

Not the same as consignment

The difference is ownership, and it decides how you invoice.

Under VMI, the customer owns the stock. You deliver, the customer buys what you delivered, and your job is to keep the level right. Under consignment, you keep ownership until the customer uses the goods, and you invoice only what was consumed. If that is your arrangement, see consignment stock.

How the module fits

The VMI module is not part of the SME solution. From SME+, it is added at a charge, plus its configuration. At Enterprise, all modules are included and you pay for the configuration. It builds on the stock records of the inventory management system and works alongside the ERP systems on the integrations list. How BizBloqs is billed, without prices, is on the WMS cost page.

Bring one customer site and its product list to a demo, and we will show how the scans, the reorder levels and a blocked batch look in BizBloqs. Book a BizBloqs demo.

What is vendor managed inventory?: Vendor managed inventory is an arrangement in which the customer owns the stock and the supplier keeps it at the right level. The supplier watches the stock at the customer's site and refills it before it runs low, so the customer does not have to place routine orders.
What is the difference between VMI and consignment stock?: Ownership. Under VMI, the customer owns the stock and the supplier keeps it at the right level. Under consignment, the supplier owns the stock until it is used, and the customer pays only for what it consumed.
How does the supplier see the stock at the customer's site?: With the BizBloqs VMI module, the supplier gives its customers scanners. The customer scans stock in when it arrives and out when it is used, with batch and expiry date. BizBloqs keeps the stock per customer site from those scans.
What happens in a recall?: The supplier blocks the batch in BizBloqs. A blocked batch can no longer be used, so it is stopped at every customer site at the same moment, and the supplier can see where it still sits.
Does VMI need EDI?: Not with this module. The stock data comes from the scans at the customer's site, so the customer needs a scanner, not an EDI connection.