We recently posted about the implementation of a VMI (Vendor Managed Inventory) for a key client, based in China. Whilst we had already been to Shanghai to visit the customer directly, we returned to Shanghai to meet with, and audit our VMI partner(s). As part of the VMI implementation, we are working with a shipping broker, and a warehouse provider.
The importance for auditing both of our partners for the VMI process is due to the fact that we have extremely specific requirements when it comes to the shipping, handling and storing of the product in question. For example, the products have to be stored at a specific temperatures during the journey, and during the storage period on the ground in Shanghai. We carried out relevant audits to ensure that these requirements would be met, and that the controls would be in place for this. You can read more about the products being provided in our product case study.
A System That Works for Both Parties
The system for our VMI has been carefully structured between ReAgent, and our customer to ensure that it works for both parties. An interesting element of the system is down to the warehouse storing structure. The warehouse we are using is in a ‘bonded area’, which, in simple terms, means that our goods are held ‘before’ they clear customs. Our client will then order a specific quantity to be released through customs at their own convenience, whilst the remaining quantity of the product is stored in the warehouse.
“The facility was very impressive. The sheer size of the building was astounding. The plan is to release our first shipment to be shipped to VMI storage in May 2017”
– Simon Tasker, Operations Director, ReAgent Chemicals
Overall, we feel the audit went extremely well. With a few areas for improvement needed on both sides, including the generation and translation into Chinese of a thorough Standard Operating Procedure (SOP) for product handling and selection. It’s important that the relationship between ReAgent, our storage facility and our client works appropriately so that the oldest stock is used first.
We are extremely excited for the launch of our new vendor managed inventory system at the end of May 2017. We can already see that this system will prove to be a success for all companies involved.