When I was Materials Manager at Maricopa County, Arizona, the second largest county in the country, I introduced Vendor Managed Inventory. I took our line of fasteners: bolts, nuts screws and washers and put them in one location in the Warehouse. I called Fastenal, who specializes in Vendor Managed Inventory (VMI) for fasteners, in to see what we can do together. VMI is all about collaboration. We came to the conclusion, that each fastener type be put in a slot in a special rack that Fastenal gave us. We only paid for fasteners as we used them. There was a signed contract with agreed upon inventory levels. No Purchase Orders were used. There was no inventory carrying costs or concern for inventory turns. Fastenal would come in each week, check our inventory levels, and re-fill the rack based on agreed upon inventory amounts. We never ran out of or had too much inventory. It was a [removed] .
The Evolved Vendor Managed Inventory Model
The use of Vendor Managed Inventory model has gained acceptance in many industries. What was once thought of as an experiment, has now become the preferred way of doing business. The Ford Motor Company led by Henry Ford and The Toyota Manufacturing Company led the way to VMI.