The Pros and Cons of Vendor Managed Inventory

Inventory management is a crucial aspect of every restaurant business. By keeping track of what food and supplies are on hand, restaurants can ensure that they have enough to meet customer demand while also avoiding waste. An effective inventory management system can help a restaurant run more smoothly and efficiently, saving time and money in the long run.

As the restaurant industry becomes increasingly competitive, many establishments are looking for ways to streamline their operations and reduce costs. One way that some restaurants are doing this is by moving towards vendor managed inventory, but is it beneficial for your business?

In this blog post, we will tell you what vendor managed inventory is and share some of the pros and cons of vendor managed inventory so that you can make the right decision when it comes to inventory management.

Vendor Managed Inventory System

A vendor managed inventory system (VMIS) can be a great way to streamline your business operations and save money. With a VMIS, your vendors are responsible for managing the inventory of goods and materials that you purchase from them. This means that they will keep track of what you have in stock, and replenish your supplies as needed.

An efficient inventory management system reduces the number of stockouts and overstocks which ultimately lowers the inventory cost by 10%. Therefore, businesses are looking for inventory management systems that can cut down their costs and boost efficiency in the long run. Whether vendor managed inventory system should be your priority or not truly requires an in-depth analysis of the vendor managed inventory benefits and disadvantages. 

The Need for an Inventory Management System

In any restaurant, no matter how big or small, an inventory management system is a must. This is because it helps to keep track of all the food and other supplies that come in and go out of the kitchen. 

Without it, it would be very difficult to know when to order more of certain items or predict how much food will be needed for upcoming events. Not to mention, a good inventory management system can help save money by preventing waste and loss.

According to a survey by Bain and Microsoft, 56% of businesses aimed to increase their investment in predictive demand and forecasting by 2021. This shows that inventory management is an essential part of running a successful business and hence choosing the right inventory management system has become ever more important.

Should You Opt for Vendor Managed Inventory?

Procurement can be a tricky process, but vendor management inventory (VMI) can help simplify things. VMI is a system where the supplier manages the inventory of materials and products that their customer needs. This means that the customer doesn’t have to worry about keeping track of stock levels or ordering new supplies – the supplier will complete the procurement process for them.

Now that you know what is vendor managed inventory system, it is important to understand whether you should opt for one or not. If you’re wondering whether a vendor managed inventory platform is the right choice for your business, this section will share a list of pros and cons to help you make the decision.

Vendor Managed Inventory Benefits

There are several vendor managed inventory benefits that might go unnoticed by many businesses. Here are some of the benefits of this system that you can’t ignore.

1- Lower Inventory Cost 

It can help to reduce your inventory costs. When your vendors are responsible for managing your inventory, they can often get better deals on goods and materials than you could on your own. This can lead to significant savings for your business.

If you’re looking for a comprehensive and effective VMIS, you can’t go wrong with jalebi. One of the key features of our system is real-time inventory tracking, which is an invaluable tool for reducing inventory costs. With Jalebi, you’ll always know exactly how much inventory you have on hand, so you’ll never overstock on supplies, thus reducing your inventory cost.

2- Accurate Inventory Records

In 46% of warehouses, human error is a top issue. A VMIS can help to improve the accuracy of your inventory records. When you manage your own inventory, it can be easy to make mistakes that cost you money. But when your vendors are responsible for keeping track of what you have in stock, they are more likely to catch errors and correct them before they cause any problems.

At jalebi, we provide our users with powerful inventory reporting features that make it easy to manage your inventory and keep track of your stock levels. With our insightful reporting, you’ll always know exactly what you have on hand and can make informed decisions about ordering and stocking your restaurant.

3- Time Efficiency

Finally, a VMIS can free up your time so that you can focus on other aspects of running your business. When you outsource the management of your inventory to vendors, you don’t have to worry about keeping track of what’s in stock or placing orders for new supplies. This can give you more time to focus on growing your business and providing excellent customer service.

With 25% of retailers looking to invest in new inventory systems, opting for jalebi can be your best shot right now. Restaurants that opt for our inventory management feature can focus on their operations while maintaining time efficiency too. 

If you’re looking for a way to streamline your operations and save money, a vendor managed inventory system may be all that you’re looking for. 

Vendor Managed Inventory Disadvantages

Before opting for a VMI, here are three primary disadvantages to VMI systems you should know about.

1- Additional Resources 

The biggest disadvantage of VMI is that it can increase the requirement for resources to manage the system. The vendor must invest in resources to manage inventory levels, including staff, software, and hardware. The customer may also need to invest in additional resources to interface with the vendor’s system. In some cases, these increased costs may offset any savings from improved inventory management.

2- Decreased Flexibility

Another disadvantage of VMI is that it can lead to decreased flexibility and responsiveness for the customer. The customer relinquishes control of their inventory to the vendor, which means they may not be able to make last-minute changes or respond quickly to unexpected demand. This can be a critical issue in industries where timing is crucial, such as fashion or technology.

3- Communication Barriers

Finally, VMI can create communication challenges between the vendor and the customer. Because the Vendor manages all aspects of inventory, they may not have visibility into the day-to-day operations of the customer’s business. 

This lack of understanding can lead to errors in inventory planning and execution. Likewise, customers may feel like they are losing control of their supply chain and become reluctant to provide information about their business needs to operate.

Vendor Managed Inventory Steps

There are 7 vendor managed inventory steps to take when incorporating vendor managed inventory into your business model. 

1. Define the product or products to be included in the program. 
2. Develop performance metrics to track and manage the program.
3. Draft an agreement with the vendor(s). 
4. Train employees on the program. 
5. Implement the program and track results.  
6. Adjust as needed based on results. 
7. Evaluate the success of the program and make changes as necessary.

With these vendor managed inventory steps, restaurants can integrate VMI into their business and streamline their operations.

Streamline Your Inventory Management With jalebi

If you’re running a restaurant, then you know how important it is to keep your shelves stocked and your customers happy. But what happens when you run out of stock? 34% of businesses have had to delay an order shipment because they didn’t have enough inventory, which can be a huge disappointment for customers.

That’s where jalebi comes in. Our inventory-first restaurant management platform ensures that you’ll never run out of stock again. By keeping track of your inventory levels and alerting you when you need to reorder, we take the guesswork out of stocking your shelves. That way, you can focus on what you do best – running your business.

jalebi’s Unparalleled Features

1. Menu and Recipes Synchronization

jalebi synchronizes menus with recipes so that businesses can stock the right amount of inventory at hand. This way, restaurants can be sure that they always have what they need to make their customers happy.

2. Insightful Reporting

We provide insightful reporting to help restaurants measure the true cost of food. By tracking and managing inventory at every stage of the food service process, we give restaurants a clear picture of their food costs.

3. Real-Time Inventory Tracking

At jalebi, we track inventory in real time based on customer consumption. This allows restaurants to always have the right amount of food on hand, reducing waste and ensuring that customers always have a great experience.

Through real-time inventory tracking, restaurants can ensure their supply chain management processes are streamlined as well. Real-time tracking also allows you to quickly identify any potential issues in your supply chain so that you can take corrective action.

Final Thoughts

If you’re looking for a restaurant management system that can streamline your inventory and help you grow your business, then you need to contact us today. Our inventory-first system is designed to help restaurants of all sizes manage their inventory more effectively and scale their growth.

Don’t let running out of stock ruin your reputation – sign up for jalebi!