Increase Profits with Consignment and Vendor Managed Inventory for Dynamics AX
The right inventory drives your sales. The right inventory to sales ratio makes you profitable. Too much inventory or too little and you lose money.
The right inventory drives your sales. The right inventory to sales ratio makes you profitable. Too much inventory or too little and you lose money.
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Few things, if any, make more difference in a distributor’s business model than efficient inventory management.
The right inventory drives your sales. The right inventory to sales ratio makes you profitable (not taking anything else into account). Too much inventory – you lose money. Too little inventory you lose customers and money. So theoretically, ensuring you always have the right amount of inventory is a major key in profitability!
We are familiar with inventory management methods dating back to WW2 logistics such as re-order points, safety stock and so forth all the way to MRP, Gordon Graham Principles, JIT, Lean Methods and more. All of these methods have one purpose in mind – manage your inventory to sales ratio for maximum revenue.
Not so long ago, everyone started working together – collaborate – to keep inventory stock at a minimum but at maximum customer satisfaction and availability. So along comes Consignment Inventory and Vendor Managed Inventory.
Consignment Inventory (CI): The inventory I (distributor) keep at my customer site(s)
Vendor Managed Inventory (VMI): The inventory my vendor keeps at my (distributor) site(s)
CI – I (distributor) can increase customer satisfaction and reduce costs by agreeing to place inventory in a customer location at no cost to the customer until they use it. There are major advantages for both the vendor and the customer.
VMI – I (distributor) can increase customer satisfaction and reduce costs by agreeing to let my vendor place inventory at my location at no cost to me until I use it. There are major advantages for both myself and my vendor that can lead to positive results in my margins and inventory carrying costs and turns for me (distributor).
It’s easy. The process itself is logical and simple to understand. Execution is often another matter altogether. Taking advantage of CI and/or VMI requires having software in place that is capable of automating much of the process.
AXIO for Distribution provides a complete distribution solution that enables and automates standard processes to support both VMI and CI. These processes have training and implementation documentation to help you roll out both or either one of these inventory management methods.
Of course, AXIO for Distribution is much more than inventory management. It is an end-to-end advanced supply chain management software for both small and large distributors. We’ve extended the powerful capabilities of Microsoft Dynamics AX to include industry-specific functionalities that cover all the important processes a modern distributor needs: sales and operations planning, demand planning, revenue management, order management, inventory management, business intelligence, procurement management and more.
Built by industry experts, AXIO for Distribution goes beyond traditional enterprise resource planning (ERP) software to tackle the complex needs of today’s distributors and enable business gains.
Please reach out if you would like to learn more about how AXIO for Dynamics AX and Dynamics 365 can help your distribution business operate more efficiently.
Dominic Telaro CFPIM, CIRM
Vice President Industry Solutions, SBS Group
Dominic Telaro brings over 35 years of Manufacturing, Distribution, Software and
Consulting experience. Half of his professional career has been in Manufacturing and Distribution from shop floor and warehousing positions to management. During this time he implemented ERP, DRP and Logistics solutions as internal Project Leader. The second half of his career has been in consulting, product management, product development and both consulting and software sales. He has held positions as VP Of Industry Solutions, VP of Product Development, VP of Sales and Marketing and Global Practice Leader for companies like IBIS Inc., IBM, Janis Group, Metamor, Marcam Corp. and more. Presently he is responsible for Industry Product Vision for multiple ERP solutions at SBS Group USA.
APICS Fellow and Certified in Integrated Resource Management, Instructor at Universite de Montreal, Vanier College and Granby CEGEP for APICS certification; Lead instructor for internal APICS training at Bell Helicopter, Avon, Le Groupe Hamelin