VMI Explained: How Econo-Pak Uses Vendor Managed Inventory to Deliver Reliable Food Packaging Solutions

In the food industry, efficiency and reliability are everything. From ensuring food products reach shelves on time to keeping production running smoothly, the right packaging solutions make all the difference. That’s why Econo-Pak leverages Vendor Managed Inventory (VMI), a supply chain strategy that helps us keep costs low, stay flexible, ensure reliable supply, and make sure your products reach shelves on time.

In the latest episode of the Econo-Pak Contract Food Packaging Podcast, our hosts Sarah (Sales & Marketing Manager) and Mike (Vice President) sat down with Tim Shay (Director of Procurement) to explain how VMI works, why it matters, and how it creates real value for businesses like yours.

WHAT IS VENDOR MANAGED INVENTORY (VMI)?

Vendor Managed Inventory (VMI) is an inventory management strategy where suppliers oversee inventory levels. Instead of filling warehouses with excess food packaging materials, suppliers store them and deliver only what is needed, when it is needed.

For Econo-Pak, this approach allows us to:

• Buy in bulk at better prices
• Maintain a reliable supply, ensuring materials are always ready for production
• Free up valuable warehouse space
• Streamline procurement processes improving efficiency across the supply chain
  
  

HOW VMI CREATES VALUE FOR OUR PARTNERS

VMI makes our operations smoother and our partners benefit directly. Here’s how:

• Reliable Supply – Materials arrive on time so production stays on schedule
• Lower Costs – Bulk purchasing secures competitive pricing, which benefits our partners
• Faster Response to Demand – Just-in-time delivery reduces delays and helps meet changing demand
• More Warehouse Space – Extra room lets us take on more projects to support your needs
  
  

VMI, JUST-IN-TIME MANUFACTURING, AND ECONO-PAK’S STRONG SUPPLIER RELATIONSHIPS

By combining VMI, just-in-time manufacturing, and strong supplier relationships, Econo-Pak gives partners smarter, faster, and more cost-effective packaging solutions.

For your business, this means: fewer delays, better pricing, and confidence that your products will reach shelves on time.

When you choose Econo-Pak, you’re not just selecting a contract packaging supplier, you’re partnering with a team that prioritizes your success with scalable, flexible, and dependable packaging solutions.

KEY TAKEAWAYS

• Vendor Managed Inventory (VMI) makes inventory management smarter and more efficient.
• Strong supplier relationships are the foundation of successful VMI programs.
• Just-in-time manufacturing enables Econo-Pak to be more responsive and flexible to demand.
• At Econo-Pak, VMI ensures reliable packaging supply, better pricing, and consistent service.
• By combining just-in-time manufacturing with trusted supplier relationships, Econo-Pak maintains both efficiency and flexibility.

EPISODE BREAKDOWN

00:00 – 02:17 What is Vendor Managed Inventory (VMI)?
02:18 – 05:33 Benefits and Challenges of VMI
05:34 – 07:58 Just-in-Time Manufacturing and Supplier Relationships

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TRANSCRIPT

SARAH
Welcome to the Econo-Pak Contract Food Packaging Podcast. I’m Sarah, the Sales and Marketing Manager. We’re here with Mike, our Vice President, and Tim, our Director of Procurement. And today, we’re going to be talking about VMI, Vendor Management Inventory.

TIM
VMI, vendor managed inventory, I’d probably consider it like a lean manufacturing philosophy, methodology, even potentially, like how you treat it as a six sigma tool. Essentially, you are buying at volume and not paying for whatever the purchased goods are until they’re released to your facility for production, and the supplier is holding on to the bulk. So whatever the agreement is, it’s basically, I’m gonna buy X from you. I purchased it at a greater volume for a discount, going to have it released against my planning demand, that I’m not taking up extra space in the warehouse, right? So it’s kind of, you want to have the benefit of the purchase volume with the ease of freeing up space in your warehouse for other things. It’s not a new concept that’s been around for a long time.

As we previously mentioned during COVID, that kind of shrank. The amount of time that a supplier would hold materials for you has definitely decreased a bit because a lot of supplying or manufacturing warehouses that held on to materials for their customers got hit by all the challenges of COVID. Whether it was labor or just whatever the market instability or all these different things, a lot of manufacturers kind of held onto material longer than they would have liked to. But the concept is still alive. It’s something that we’ve been making changes here, in our organization to do, right? So it frees up cash for us, frees up space. We’re still tapping into our same buying power. I mean, it’s a win-win. The challenge is knowing what your “should cost” is because you are going to be paying something for the storage. Like that’s an agreed-upon, whatever that percentage is. Also, you’re talking about a little bit extra in logistics cost to run over to you. But if you have trucks coming over weekly, which we do from some suppliers, it’s kind of like normal business.

MIKE
And that can align really well with our customer service, making sure that they properly manage a production schedule with a forecast in place. I know a lot of our clients, we work with a 13-week rolling forecast with a four-week lock. So that gives us the flexibility to be able to bring those materials in and do the things that we need to. And understanding that with our clients, sometimes things shift out so that we can be as flexible as possible.But that 13 weeks allows us to really plan and make sure that we have the equipment allocated and all those things, but especially with the materials for this conversation. That’s critical, right?​

TIM
This makes this kind of plan, this project, this kind of philosophy of how to bring materials in, it makes sense for us on a lot of packaging materials, especially things that take up the most volume. So we try to bring those in close to production as possible to support warehouse capabilities. Obviously, we always do run into challenges with lead times and shifting forecasts,and things of that nature. Again, we work with really great suppliers that help us meet our initiatives, our goals. So it’s definitely something that I believe will help us as we scale, as we get more customers in the door and fulfill those needs while at the same time giving great service to our existing customer base.

SARAH
Yeah, PJ, our CEO, he loves that we do just-in-time production. It takes a lot of management and effort on the part of procurement, logistics to manage all of the materials and production that goes on during that time, with all the customers we have in the footprint that we’re in. Even though we’re growing, our customers are growing right along with us. So being able to have that just-in-time manufacturing helps us stay nimble on our feet and prevents us from having to slow down what we can take. So you guys have been doing a really great job.

TIM
Always room for improvement, right? The just-in-time model, it’s a variable. We were living in one timeline, and now we’re switching to another. What we think is best is to support production and warehouse operations. It’s a bit of a moving variable for us, but against demand planning, we do a good job in the relationships we do have with our existing suppliers. I mean, it’s great. It’s just one of those things that the supply chain, it’s like a legitimate living breathing thing for sure.

MIKE
Definitely.

TIM
Part of the success is the VMI programs, to have the just-in-time delivery options.​​

MIKE
Is that like a big piece of your onboarding process for a supplier?

​TIM
Oh, it’s definitely part of the checkbox. And part of that, too, is that we love to geo-target suppliers. Something that’s in our backyard. Doesn’t always happen. But then it’s kind of like, What’s your logistics lane look like? Will you hold materials for us? We kind of go down that list. What’s on-time delivery? Purchase order fulfillment? Are you shipping late, short to us all the time? Are you on-time, giving us a full PO back? We look at all those types of things, but VMI programs, when we see that, it’s always great. We just like to know how much we are paying for it. We like to have some visibility. I mean, it’s all really straightforward. What does that look like? Does that make sense for us? How much is it for our warehouse team to move all these things versus paying 24% for the extra storage to have it dropped when we want? That gets us out of these six weekly times. Some things, for raw materials, not always the case, but we find for some packaging materials, it is. So we take advantage of it when we can, for sure.

MIKE
It seems like a great program, and for a vendor to be able to be flexible, to offer something like that, it’s nice to be able to have that on our checklist.

TIM
For sure. Yes.

SARAH
I’m glad we were able to shine a little bit of a spotlight on that today. Yeah, thank you so much for joining us today, Tim.

TIM
You’re welcome. Thanks for having me again.

MIKE
Thanks.