Both Vendor Managed Inventory (VMI) and Software as a Service (SaaS) have existed for many years, but how does this approach to VMI differ from a locally hosted solution? Get the answer right here.
Trust. It is probably the single most important aspect of any Vendor Managed Inventory solution. Handing over the responsibility of your inventory to a business partner requires a lot of it.
Since 1991, TrueCommerce Datalliance has connected suppliers with buyers through VMI-solutions, and in 1995 they began offering it as “Software as a Service”.
As a pioneer in this field and with almost 25 years of experience, TrueCommerce Datalliance knows just about everything related to VMI and SaaS. And according to David Hall, Analytics Project Manager, the core aspect of VMI remains the same regardless of the technology.
»Any time you enter into a VMI-relationship, building that relationship on trust is very important. And adding a third party, a VMI-provider, can help as well as harm,« he says.
It’s clear that choosing a SaaS-solution doesn’t change the fundamental premise of trust. There are, however, some clear benefits to the SaaS approach.
One of the main benefits to VMI as SaaS is the relatively low upfront investment required. Since the VMI-provider already has the system and servers ready, the supplier and the buyer don’t need to acquire new hardware or increase their IT resources themselves.
»At the most basic level, VMI as SaaS requires the buyer to be able to produce a product activity file, as well as to be able to receive a purchase order acknowledgement. That’s it,« says David Hall.
As your company and the number of customers grow, you would typically need to invest in more hardware, adding new layers of complexity to your software. With a SaaS approach, growing is about as easy as flicking a switch, according to David Hall.
»Because so much in VMI is based on the idea of connectivity, it’s easy for an experienced SaaS provider to adjust the scalability because the buyer doesn't have to learn how to connect to every new supplier or distributor,« says David Hall.
Related to the issue of scalability is the option to add software and new functionality on the fly, as well as updates to the core system.
»One of the things that makes SaaS really wonderful, is that because it is delivered online, there can be updates and access to software that doesn't require any work from the supplier,« says David Hall.
Something like adding a new inventory model might take up a lot of resources to do yourself, but through a SaaS, it’s a quick and easy task, according to David Hall.
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»Any time you are talking SaaS, you are putting your data into the cloud. That has benefits but it also has drawbacks,« says the Analytics Project Manager from Datalliance.
Finally, any SaaS solution relies on the internet. Therefore it is imperative to have a stable connection.
»Obviously, the VMI provider needs to be connected and whoever has to interact with the system needs to be able to do that over the internet. So being able to connect to the internet from both directions is important,« explains David Hall.
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When trying to differentiate between hosted VMI and SaaS, it comes down to whether you are willing to let your data sit somewhere outside your organisation, to gain the scalability as well as the lower cost of entry. And on top of that any innovations you are likely to get from a SaaS-provider.
»Generally speaking, if you as a buyer or supplier are willing to try the VMI programme, and you are considering developing your own, I would ask: Are you willing to invest more than a VMI service provider that focuses on VMI?« asks David Hall.
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This blog is driven by Satair Marketing & Communication with input from both internal and external contributors.
Satair is a world leading provider of aftermarket services and solutions for the civil aerospace industry. Satair is a stand-alone company and Airbus subsidiary.