Inventory Level Reduction with VMI and Internet of Things Method

Abstract

PT. XYZ is a company focusing on producing herbal beverages in glass bottles. Inventory level is an important aspect and needs to be controlled by PT. XYZ because it has a strong relationship with the company's cash flow. At this moment, the average inventory level for the glass bottle of PT. XYZ is 32 days, while the target inventory level of the glass bottle must be achieved by PT. XYZ is 14 days. This research will focus on reducing the inventory level of glass bottles in PT. XYZ and ensure the supply sustainability in a high service level. Reduction of inventory level in PT. XYZ can be achieved by implementing the Internet of Things (IoT) and the Vendor Managed Inventory (VMI) method. VMI method implementation will focus on the stock availability with a low inventory level, and the implementation of the Internet of Things will make the inventory level information can be accessed in real-time and resolve this inventory problem. After improvement had been conducted, the service level (vendor performance) of glass bottles increased from 65% to 95%, and the inventory level reduced from 32 days of inventory (DOI) to 9 days.