In the construction supply industry, managing stock levels accurately across multiple locations is a constant challenge. Distributors often deal with stockouts, overstocking, and slow replenishment cycles—especially when handling thousands of SKUs across regional yards.
To solve this, many are turning to Vendor-Managed Inventory (VMI) as a smarter, more collaborative approach. When done right, VMI reduces manual ordering, increases product availability, and improves operational efficiency.
This case study explores how a leading building materials distributor successfully improved their VMI program—and the measurable results they achieved.
📌 Company Overview
Company: SummitBuild Supply Co.
Industry: Construction material distribution
Locations: 12 regional branches across the Midwest and Northeast
Challenge: Inventory imbalance and frequent manual reordering from multiple vendors
🚧 The Problem
SummitBuild was struggling with inconsistent inventory levels at its regional yards. Certain items—like structural connectors and insulation—were frequently out of stock, while other items sat untouched for months. Procurement staff spent hours chasing vendors and reconciling reorders. Manual processes led to missed deliveries, misaligned stock levels, and lost sales.
✅ The VMI Improvement Strategy
SummitBuild partnered with its top 5 manufacturers to revamp its vendor-managed inventory program, focusing on process standardization, system integration, and proactive replenishment.
- ERP-Integrated Vendor Access
They gave select vendors controlled access to their ERP data, including real-time inventory levels, sales velocity, and delivery schedules.
Result: Vendors could monitor usage and restock automatically without waiting for manual POs.
- Min/Max Thresholds by Branch
SummitBuild worked with vendors to define location-specific min/max inventory thresholds based on demand trends, lead times, and delivery frequency.
Result: Replenishments were tailored to actual usage patterns—avoiding both overstock and stockouts.
- Cycle Count-Based Verification
Instead of relying solely on scheduled reports, the team used weekly cycle counts to verify high-value or fast-moving items. Discrepancies were flagged for immediate vendor review.
Result: Increased trust between partners and a 92% reduction in inventory discrepancies across VMI SKUs.
- VMI Performance Scorecards
To ensure accountability, SummitBuild launched a quarterly scorecard system to evaluate vendor performance based on:
Fill rate
On-time replenishment
Inventory turnover
Cost-to-carry metrics
Result: Vendors began competing to improve performance, and visibility into slow-moving SKUs improved dramatically.
📊 Results After 6 Months
SummitBuild saw tangible, measurable improvements in both inventory performance and operational efficiency:
Stockouts reduced by 68% across key VMI categories
Inventory carrying costs dropped by 22%, thanks to leaner stocking practices
Manual reordering time fell by 40 hours/month per branch
Inventory turnover increased by 35% for VMI-managed SKUs
Vendor response time to replenishment requests improved by 60%
💡 Key Takeaways
- Technology-Driven Transparency Drives Trust
When vendors can see usage data in real time, they become more accountable and responsive.
- Tailored Thresholds Prevent Blanket Reordering
Not every branch needs the same levels—customized min/max settings reduce waste and improve availability.
- Scorecards Encourage Continuous Improvement
By sharing performance metrics, SummitBuild turned their vendors into strategic partners—not just suppliers.
Final Thoughts
Vendor-managed inventory, when implemented thoughtfully and supported by technology, streamlines operations and strengthens supplier relationships. SummitBuild’s case proves that with the right strategy, VMI can move beyond theory to deliver real, measurable value—from the yard to the job site.
As supply chain complexity increases, VMI offers a path to greater stability, predictability, and customer satisfaction in the building materials sector.
