When done well, Vendor Managed Inventory (VMI) is an effective and streamlined way to manage inventory and ordering for both distributors and their customers. VMI equips distributors with the ability to offer customers better inventory management, improved control over spend, real-time reporting and simplified re-ordering.
Not long ago, vending was known only for dispensing soft drinks and snacks. Today, vending systems have merged with inventory tracking software to provide industrial vending solutions that save time and money for distributors and their customers. User-friendly vending and inventory control software provide control for a variety of commonly used items, ranging from gloves and safety glasses to drill bits and cutting wheels.
Benefits of vending include:
For distributors
- Increased sales
- New customer acquisition
- Customer stickiness
- Plug-and-play experience
- Real-time inventory tracking
- Improved efficiency
- Enhanced customer security
For customers
- Improved service
- Consistent inventory levels
- Increased productivity
- Reduced carrying costs
- Reduced stockouts
But to reap these benefits, distributors need to get off on the right foot, crafting contracts that will ensure a win-win in the relationship.
Know that you can achieve a Return on Investment with vending.
Achieving ROI is easier than you may imagine and it doesn’t necessarily mean your customers have to pay for their vending machines. If you can secure less than $250 in new business profit each month either through the machine or outside the machine, you can easily justify the cost of installing a vending machine in a customer location.
Establish clear expectations but remain flexible.
Avoid unnecessary miscommunication and unrealistic expectations by laying out the terms of the contract plainly and clearly. For example, provide pertinent details such as billing cycles, consignment terms and types of items that will be stocked in the machines. Just remember that while establishing clear expectations at the onset is critical to your customer relationship, you must remain flexible. Your customers are relying on you to give them more control over their inventory, not less. It’s important to and adapt to their needs. That will give you an edge over your national competitors.
Recognize the power of vending combined with inventory control software.
Never underestimate the value that streamlined and consolidated purchasing options such as vending can provide your customers. Be sure to clearly explain the benefits and ease of use that’s possible with vending to your customers. Encourage your sales reps to be proactive when informing customers of your program. Help customers identify areas where vending-powered inventory control can reduce cost and improve overall productivity. Distributors are often surprised when customers are willing to commit extra spend in exchange for access to a vending machine with VMI capabilities. By adhering to these vending-contract best practices, distributors can get vending programs off on the right foot and ensure their long-term profitability.
Mark Hill is the founder of 1sourcevend, a NetPlus Alliance service provider, which has been helping industrial distributors add value to their customer relationships since 2004 with simple, flexible and affordable inventory management solutions. For more information, reach out to Mark at 1sourcevend by calling 901-345-6011 or visiting their website.
