For some supply chain pros, now’s a good time to think about knocking down all of the walls.

No, we’re not talking about bringing in the wrecking ball and bulldozers.

It’s Customer Managed Inventory (CMI), which takes traditional supply chain operations beyond your own four walls, and in the process improves efficiency and reduces operating costs.

In a nutshell, CMI increases visibility into all areas of the supply process. It gives you the power to monitor, control and order inventory from your suppliers, while skipping over some the in-between steps.

By kicking your working relationship with vendors up a notch or two, you’ll have the ability to order what you need before your own supplies run out, saving the hassle and costs of emergency stock deliveries and frustrated customers.

It also can speed up your normal delivery times, with less inventory to manage.

In fact, experts say, a few of the benefits of CMI include:

• increased sales
• stronger customer relations
• less time spent on administrative duties
• reduced costs overall, including shipping, and
• better delivery performance.

Because CMI systems have the ability to assess your on-hand supply and trigger re-orders before you hit bottom, some companies have achieved sales increases of 20% to 35%. This, in turn, solidifies customer relationship and makes them less likely to wander.

CMI systems can also generate savings in Inventory operations.

By reducing the amount of excess inventory on your shelves, you can trim:

• counting costs — cycle counts, inventory control
• inventory insurance, and
• financing charges on inventory still in stock.

CMI doesn’t come cheap, though. Purchasing a system that’ll put you in CMI mode will take a lot of thought and documentation.

But with shipping and inventory costs rising each day (so it seems) and the price of technology decreasing, you might soon reach a point where CMI makes fiscal sense.

Tags: CMI, customer managed inventory, inventory, operating costs, supply chain