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Most vendors sell inventory.
Some go further — they build full branches inside your business.
That’s what a VMI is. Vendor Managed Inventory.
Instead of stocking your own materials, a vendor sets up shop in your facility. Their products. Their people. Their space — embedded into your operation. You don’t own anything until you purchase it across the counter.
You get the access without the risk.
That’s what I call “the VMI flex.”
And when you’ve got two VMIs running in your operation like we do (second one opens next week)?
That’s not just smart. That’s scale.
What Is Vendor Managed Inventory (VMI)?
A VMI is more than a few shelves of vendor products. It’s a strategic partnership where the vendor owns the materials, handles the staffing, and manages the logistics — all from inside your building.
This setup gives you:
- Zero upfront inventory investment
- Fast access to materials without supply house delays
- Tightened relationships with key suppliers
- Reduced carrying costs and operational friction
When done right, VMI systems remove massive stress from the business — and turn your supply chain into a true competitive advantage.
What Happens Inside a VMI?
You’re not just borrowing vendor products. You’re giving them a physical presence in your shop. Here’s what that looks like in practice:
- Inventory is vendor-owned until it’s checked out by your team
- Vendor staff run the counter and handle transactions
- No need for purchase orders, restocking, or logistics coordination
- Your team simply walks in and gets what they need
- You’re billed only when the product is used or sold
It’s fast. It’s clean. And it eliminates a ton of day-to-day chaos for busy operators.
The Benefits of Vendor Managed Inventory
VMI programs are about more than inventory — they represent a smarter, leaner way to scale operations.
Here’s what you gain:
- Capital freed up from sitting on shelves
- Tighter vendor relationships with aligned incentives
- Space optimization — no overflow stock cluttering your warehouse
- Increased responsiveness — with parts and tools always within reach
- Simplified bookkeeping, since items hit your books only when used
For a growing trades business, that’s a game-changer.
What Does It Cost to Set Up a VMI?
This is the best part: it doesn’t cost you much upfront.
The vendor takes on most of the burden.
Typically covered by the vendor:
- Inventory investment
- Staffing and payroll
- Setup and shelving
- POS and inventory tracking systems
- Ongoing replenishment and logistics
What you need to provide:
- Physical space inside your facility
- A monthly or annual purchase commitment
- Consistent demand to justify the setup
If you’re doing $2M+ in annual revenue (and sometimes less), many vendors will take that seriously. You become a priority account — not just a customer.
And for your business, it means no capital tied up in slow-moving stock.
Why We’re Running Two VMIs
Most companies stop at one vendor relationship. That makes sense. It’s efficient. It covers most of your needs.
But two?
That’s when you know your volume is high enough — and your operations are tight enough — to support multiple full-time vendor teams inside your business.
Here’s what that gives us:
- Broader material access
- More flexibility in purchasing
- A fallback in case one vendor runs into supply issues
- Lower prices from volume leverage
We don’t technically have inventory anymore.
Not until we buy it.
That’s a very good feeling.
Should You Consider a VMI?
The question isn’t “Should I get a VMI?”
It’s: Are you ready for one — or maybe even two?
Ask yourself:
- Are you burning cash on overstocked inventory?
- Are you wasting labor hours tracking POs and invoices?
- Do your crews lose time driving to supply houses?
- Are you big enough to guarantee monthly volume?
If the answer to any of those is yes, then Vendor Managed Inventory might be your next smart move.
Final Thoughts
VMI isn’t just a supply chain tactic — it’s a scale strategy.
When vendors start opening branches inside your business, it’s not just about logistics anymore.
It’s about trust.
It’s about cost savings.
It’s about operating like the big players — without tying up big money.
If you’re building something real, a VMI might be your proof.
And if you’re already there?
Maybe it’s time to open your second.
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