ANALYSIS AND IMPLEMENTING VENDOR MANAGED INVENTORY WITH CONSIGNMENT STOCK OF CONSUMABLE PARTS IN PT. RST

Abstract

Manufacturer attempts to balance their own supply chain performance in between fulfilling customer demand and maintaining sufficient supply of raw materials and finished goods. This balance is often achieved through the right inventory management. From the current observation, PT. RST has high value of unhealthy stock in their inventory, mainly consumable parts line. The right inventory management strategies are utilized to boost company current inventory performance. The traditional stocking program is replaced by such Vendor Managed Inventory with Consignment Stock. This inventory strategy is based on enhanced collaboration between the company and its suppliers. PT. RST proposed to its suppliers to stock the items in company’s warehouses based on the inventory min-max policy with the agreement that they would assure over time. Supplier is responsible managing the stock in minimum for 5 days stock coverage and not more than 10 days stock coverage. After the implementation of Vendor Managed Inventory with Consignment Stock to 15 consumable parts, unhealthy stock value is proven to be reduced to 0 at the second month of implementation and number of purchased order is also eliminated. The reduction of purchase order created leads to cost savings around 8 million per month. Vendor Managed Inventory with Consignment Stock inventory strategy implementation in PT. RST has been successfully optimize company’s inventory level.