Inventory Solutions

VMI: A Simple Solution to Complex Supply Management for Food Manufacturers

May 1, 2025

Devon Vogel

Food manufacturers operate in a uniquely challenging environment.

Every day, they must navigate stringent regulations, volatile demand, complex supply chains, high sanitation and hygiene standards, and more. As a supplier to facilities across the country, we know how each of these can create volatility in the supplies needed at a given time and make managing stock all the more important. At Nelson-Jameson, I see the outcomes of daily conversations on the topic. And I see first-hand that efficient management of critical supplies is not just a matter of operational effectiveness—it's a fundamental pillar of safety, compliance, and profitability.

Higher-volume operations, in particular, face unique challenges in ensuring a consistent flow of materials their teams need, from personal protective equipment (PPE) and cleaning supplies to specialized testing equipment and maintenance parts.

In the food manufacturing landscape, adopting innovative inventory management strategies is crucial for maintaining productivity, reducing costs, and achieving operational excellence. One such strategy that has emerged as a cornerstone of efficient supply chains is Vendor-Managed Inventory (VMI).

In March, Verified Market Reports projected a Compound Annual Growth Rate of about 10 percent from 2025 to 2033 for the global VMI system market. Let’s take a look at how VMI systems work, why their value is driving more adoption, and steps for successful implementation.

Inventory Management: High stakes call for an optimized program

Food manufacturing facilities operate under stringent regulations and demanding production schedules (learn how Nelson-Jameson regulatory compliance experts keep your facility ahead of the curve). The consequences of supply chain disruptions, stockouts, or the use of non-compliant materials can be severe for any food manufacturer. As we’ve seen recently on a global scale, this can mean production delays, financial losses, food safety risks, and regulatory penalties.

Effective inventory management in this sector must address key challenges:

Maintaining Food Safety and Compliance: Ensuring the availability of the correct cleaning supplies, testing materials, and PPE is paramount for meeting food safety standards and regulatory requirements.
Preventing Production Downtime: Stockouts of essential maintenance parts or processing aids can lead to costly delays and negatively impact production efficiency.
Managing Diverse Inventory: Food manufacturers often handle a wide array of items and ingredients, each with specific storage requirements, usage rates, and criticality levels.
Optimizing Costs and Stock Levels: Balancing the need for readily available supplies with the costs of holding excess inventory is a constant challenge.
Addressing Staffing and Process Efficiencies: Traditional inventory management methods can be labor-intensive and prone to errors, as well as inefficient.

Vendor-Managed Inventory (VMI): Your strategic solution

What is a Vendor-Managed Inventory (VMI)? We define it as a collaborative (emphasis on “collaborative”) supply chain management strategy where the supplier manages and replenishes inventory levels at the customer’s location.

Instead of initiating their own purchase orders, the vendor monitors stock levels and ensures timely replenishment based on real-time data and pre-defined thresholds.

How VMI Works:

Data Sharing: The food manufacturer shares inventory data with the vendor, including stock levels, usage rates, and demand forecasts, often through electronic data interchange (EDI) or other automated systems.
Inventory Monitoring: The vendor utilizes inventory management systems to track stock levels in real-time. These systems alert the supplier when inventory reaches a minimum threshold.
Replenishment: Once the system alerts low stock, the vendor automatically generates orders and delivers stock and minimizes downtime. Replenishment can occur through regular deliveries or just-in-time (JIT) methods.
Performance Tracking: The vendor and the manufacturer can even agree on success metrics, such as inventory turnover, lead times, service levels, and cost savings, in order to be sure the program is working for them.

“The consequences of supply chain disruptions, stockouts, or the use of non-compliant materials can be severe for any food manufacturer. As we’ve seen recently on a global scale, this can mean production delays, financial losses, food safety risks, and regulatory penalties.”

How VMI can help your facility

Implementing a VMI system offers significant advantages for high-volume food manufacturing operations. Here are some of the VMI benefits we see from our customers

Reduced Inventory Costs: By transferring inventory management responsibilities, food manufacturers significantly reduce inventory holding costs, storage expenses, and the risk of waste from expired or obsolete products. Optimized stock levels mean less capital is tied up in wasted supplies.

Improved Efficiency: VMI eliminates repetitive administrative tasks associated with manual order creation and inventory tracking, freeing up time and resources that can be re-focused on production. Automated replenishment ensures that critical supplies are always available when needed, reducing the time spent searching for items.
Better Demand Forecasting: With access to the food manufacturer's sales data and historical trends, the vendor can accurately forecast future demand, ensuring a consistent stream of products even during peak periods or seasonal fluctuations.
More Collaboration: VMI improves communication and shared goals and transparent data lead to a more resilient supply chain.
Reduced Risk of Stockouts: Minimizing the risk of stockouts prevents production delays and ensures the food manufacturer can consistently meet customer demand.
Streamlined Supply Chain Operations: VMI automates and optimizes inventory management tasks, leading to a more efficient and responsive supply chain.
Access to Supplier Expertise: The best vendors have specialized knowledge and expertise in inventory management, which they can leverage to optimize inventory levels and improve supply chain performance.

How to successfully implement VMI

Implementing a VMI program requires a structured approach. Nelson-Jameson experts recommend taking the following steps to succeed.

Evaluate Current Systems: Thoroughly assess your existing inventory management processes and identify areas for improvement where VMI can provide value and ROI.
Collaborate on Objectives: Establish clear goals and expectations with the vendor, defining responsibilities, key metrics, and performance standards through service-level agreements (SLAs).
Leverage Technology: Utilize advanced inventory management systems that enable real-time data sharing and monitoring. Cloud-based platforms can be particularly effective for seamless collaboration.
Set Replenishment Parameters: Define minimum and maximum stock thresholds that will guide replenishment, ensuring inventory levels remain balanced and aligned with demand.
Monitor and Optimize: Regularly review VMI performance using analytics tools to identify areas for further improvement and refine processes over time. Building vendor-customer trust and ensuring data reliability are also critical for a successful VMI partnership.

SupplyRITE™ and VMI for food manufacturers

Solutions like SupplyRITE™ from Nelson-Jameson are designed to address the unique inventory management needs of the food manufacturing industry. SupplyRITE™ offers versatile inventory solutions, including the option for vendor-managed inventory (VMI), tailored to the specific requirements of each facility. Whether you want complete control or a partner to handle everything, SupplyRITE™ can be customized to fit your operational model.

SupplyRITE™ can help food manufacturers:

Review current inventory process with industry experts to identify opportunities for improvement.
Improve processes and gain immediate efficiencies and visibility through a custom VMI solution.
Transact and execute day-to-day business effectively with a reliable supply of critical items.
Evaluate consistently for continuous improvement.

The role of IVMs (Industrial Vending Machines) in VMI

Industrial vending machines, such as those offered as part of the SupplyRITE™ system, can be a powerful tool in a VMI strategy. These smart machines provide 24/7 access to authorized personnel while maintaining complete accountability for every transaction. For food manufacturers, this level of control is particularly valuable for managing specialized gloves, testing supplies, PPE, and safety equipment.

Benefits of industrial vending machines in a VMI context:

Automated Dispensing and Tracking: Vending machines dispense items and automatically record usage data, providing real-time inventory levels to the vendor.
Controlled Access: Access control features ensure that only authorized personnel can access specific supplies, reducing waste and misuse.
Reduced Product Loss and Downtime: By ensuring the right products are always available when needed, vending machines help reduce product loss and prevent production downtime due to stockouts.
Improved Accountability: Tracking who took what item and when helps to promote responsible consumption habits.
Data-Driven Insights: The usage data collected by vending machines provides valuable insights into consumption patterns, allowing the vendor to optimize replenishment and inventory levels within the VMI program.

Make Nelson-Jameson your VMI partner

Critical supply management is essential for any food manufacturer’s operational success. Vendor-Managed Inventory (VMI) offers a powerful and collaborative approach to streamline inventory processes, reduce costs, improve efficiency, and enhance compliance. By partnering with Nelson-Jameson’s VMI experts and leveraging SupplyRITE™, you can transform your supply chain management, ensuring a consistent and reliable flow of critical supplies. We’re here to help – contact us now and we’ll be in touch within a business day!