VMI saves money in four places: staff hours, purchase order costs, carrying costs, and stockouts. Add them up with your own numbers, and you have a dollar figure you can take to your plant manager. Here is the worksheet, with an example plant.
“It sounds nice” won’t get VMI approved. A dollar figure will. Use this worksheet with your own numbers.
|
Savings |
How to calculate it |
Example plant |
|
Staff hours |
Hours per week on packaging x loaded rate x 52 |
4 hrs x $30 x 52 = $6,240 |
|
Purchase orders |
Orders per year x cost per order ($14 to $54+) |
120 x $35 = $4,200 |
| Carrying cost | Stock removed x 25% |
$20,000 x 25% = $5,000 |
|
Stockouts |
Last year’s stockout costs (labor, freight, lost output) |
2 stockouts x $1,500 = $3,000 |
|
Total |
$18,440 a year |
Ask any supplier offering VMI whether counts, reporting, or minimum orders carry a fee, and subtract that cost from the total.
Send us your worksheet, even half-filled, and we’ll fill in the gaps with you.
S&S Incorporated · Packaging made easy since 1965 21300 St. Clair Avenue, Cleveland, OH 44117 216-383-1880 · info@sspkg.com · www.sspackaging.com Monday–Friday, 7:00 AM–3:30 PM
Take advantage of our additional program benefits:
• Custom Hold for Release
• Vendor Managed Inventory
• Package Design Services
• Profit Enhancement
• Custom Packaging
