Sourcing Models · Compared
VMI, consignment, kanban, blanket purchase orders and spot buys differ on two questions: who owns the stock on your site, and who decides when to reorder. Answer those two and the right model for each part family usually follows.
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How the five common sourcing models compare for fasteners and other C-parts.
| Model | Who owns stock on site | Who triggers replenishment | Cash impact | Best for | Watch-outs |
|---|---|---|---|---|---|
| Vendor-managed inventory (VMI) | Set in the agreement; often the buyer once delivered | Supplier, from scans or counts at the point of use | Stock levels set and tuned by the supplier | High-volume, repeat C-parts at the line | Needs agreed min and max levels and regular reviews |
| Consignment | Supplier until the part is used | Supplier, against agreed levels | Paid only as parts are consumed | Expensive or slow-moving parts you must have on hand | Usage reporting and stock counts must be accurate |
| Kanban (two-bin) | Buyer | An empty bin is the reorder signal | Buyer holds two bins of stock | Steady, predictable consumption | Bin sizes go stale when demand changes |
| Blanket purchase order | Buyer | Buyer, releasing against the blanket | Buyer pays per release | Known annual volume, fixed terms | Releases still need someone to raise them |
| Spot buy | Buyer | Buyer, order by order | Paid per order | Rare, one-off or prototype parts | Highest admin per line, no supply commitment |
Use VMI when the cost of managing a part is higher than the part itself and consumption is regular. The supplier owns replenishment, so buyers stop raising routine orders. How CSG runs VMI.
Use consignment to keep high-value or slow-moving parts on site without paying until they are used. It suits parts where a stockout is costly but turnover is low. Consignment inventory.
Use two-bin kanban for steady demand where the line itself can signal the reorder. When the supplier collects the empty-bin signal, kanban becomes a simple form of VMI.
Use a blanket PO when annual volume and terms are known and your team is happy to release against it. It fixes the commercial side but not availability.
Keep spot buying for prototypes, one-off repairs and parts too rare to plan. For anything repeat, the order cost adds up quickly.
Most OEMs end up with a mix: VMI for the high-runners, consignment for a few critical or expensive parts, and blanket or spot ordering for the rest. Getting there usually starts with supplier consolidation, so each family sits with one source before its model is chosen. C-parts management ties the models together on one programme.
Common questions when choosing how C-parts are supplied.
Both put replenishment in the supplier’s hands. In consignment the supplier owns the stock until it is used; in VMI ownership is set in the agreement and often passes to the buyer on delivery.
Not quite. Kanban is a pull signal, usually an empty bin. It becomes VMI when the supplier, not your team, reads the signal and refills the bin.
When volume is known, parts are few and your team has time to release orders. VMI pays back as the number of part numbers and sites grows.
Yes. CSG runs VMI, consignment and kitting side by side, so each part family can sit on the model that suits it.
Consignment, because you pay as parts are consumed. It also needs the most accurate usage reporting.
Send your part list and annual usage. We will suggest which families suit VMI, consignment, kanban or blanket ordering.