Vendor Managed MRO Parts Inventory: Models and Scenarios

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By: Anusuya Ramadoss -- Senior Research Analyst

31 March, 2014

Vendor Managed MRO Parts Inventory: Models and Scenarios
WHITEPAPER

The efficient inventory management remains at analyzing costs vs. benefits of carrying inventory over time. The demand forecasting is the big challenge for buyers in order to keep the critical spare parts available and to manage the larger MRO inventory. In managing spare parts, the buyers generally incur uncertain demand with no stock at place. To avoid such scenarios, the buyers need to invest more on spare parts to avoid costlier down time. If the buyers do not forecast the demand correctly, they incur higher inventory carrying cost and there is a greater chance of inventory becoming obsolete. VMI (Vendor Managed Inventory) by definition: VMI is the inventory management solution provided by the supplier which helps the buyer to get the spare part as the demand arises. VMI Partners: Suppliers including spare parts OEM and machinery OEM provide VMI services. The technology providers are the ones who provide enterprise software solution to help suppliers keep track of inventory status of buyers in real time. The buyer consumes the product at the end.