MRO
Implementation of VMI-Solution for All C-Items, Including EHS
Implemented VMI with vending machines for all C-Items, including EHS, to ensure availability and reduce stock levels accross several plants.
Industry
Manufacturing
Direct/Indirect
Direct
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Sourcing Context & Procurement Challenge
C-Items, including EHS-related products like safety-gloves and -goggels, filters, and cleaning agents, were procured reactively with high administrative effort and frequent stockouts. Local stockrooms were overfilled (and overstaffed), but availability remained poor. The procurement challenge was to introduce a scalable, low-touch supply model ensuring availability, compliance, and cost-efficiency – while reducing inventory and manual reordering.
Procurement Objectives & Strategic Levers
Targets included >20% cost reduction, improved EHS compliance, and >95% availability rate with zero stockouts. Strategic levers were VMI (vendor-managed inventory), IoT-enabled vending machines, and bundling C-Items under a few strategic distributors. By transferring inventory ownership and automating replenishment, procurement aimed to free up working capital and operational bandwidth.
Sourcing Strategy & Execution Approach
We selected a specialized distributor through a competitive tender based on their technical solution, integration capabilities, and EHS credentials. Local consumption data was analyzed to define minimum/maximum levels per machine. In countries applicable, the works-council was involved early on. Vending machines were rolled out across all plants with RFID-based user tracking. Procurement signed a consolidated service contract with fixed replenishment SLAs.
Results & Values Delivered
Cost reduction exceeded 21%, while inventory was reduced by 45% within six months. Availability increased to 98.7%, and EHS compliance improved due to locked dispensing and full traceability. Administrative tasks such as manual orders, approvals, and cycle counts were almost fully eliminated. Shop floor satisfaction increased significantly.
Role & Contribution
Procurement helped design the VMI sourcing model, selected suppliers, and negotiated the pan-regional contract. It aligned with EHS, logistics, works-council (where applicable) and operations to ensure stakeholder buy-in and successful rollout. We also defined the data and KPI governance model for usage tracking and supplier accountability.
Conclusion & Reflections
VMI is not just a supply chain efficiency tool – it’s a business enabler. The key insight: even low-value items can consume high-value resources if not managed strategically. Automation, traceability, and accountability turned a neglected tail-spend category into a benchmark case of operational excellence.