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MDM Interview: Common Pitfalls with VMI

Analyze & improve processes before automating: ‘Don’t pave the cow path’

October 10, 2010

The weak economy has led to more companies looking for new ways to improve their bottom lines. Vendor Managed Inventory has been growing in popularity, but according to Thomas A. Kozak, president of Pan-Pro LLC, it is also easy to do wrong. Kozak spoke with MDM about how to avoid the common pitfalls.

Kozak recently presented “10 Ways to Not Benefit from VMI Programs” at the 2010 IDEA E-Biz Forum, sharing lessons from his 36 years in supply channel optimization.

MDM: How do you explain VMI in practical, concrete terms?

Thomas A. Kozak: VMI is defined as everything from putting a supplier’s employee in place at a customer to write orders to moving ERP calculations from the distributor to the supplier or an outsourced cloud, all the way to advanced Supply Channel Optimization (SCO).

In my presentation at IDEA, I defined VMI with a beautifully crafted message where every word has significant meaning, and it tells Pan-Pro’s approach to Supply Channel Optimization.

But in practical, concrete terms, VMI is eliminating work, not automating it.

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