Integrated supply
Reviewed by Dasha ShakovVP Marketing, Proton
Updated
What is integrated supply?
Integrated supply is an arrangement in which a distributor takes over most or all of a customer’s purchasing, stocking and storeroom work for a category. The category is most often MRO supplies, and the distributor typically staffs the storeroom, buys from other suppliers as well as its own lines, and bills through one consolidated invoice.
How it works
It goes further than vendor-managed inventory, which covers replenishing agreed items, by handing the distributor the whole storeroom and the supplier base behind it. Contracts usually include reporting on spend and savings.
Integrated supply example
A paper mill closes its own MRO storeroom team and signs an integrated supply contract. Two of the distributor’s employees now run the storeroom on site, ordering bearings from the distributor and specialty pump parts from other suppliers.
Related terms
- Vendor-managed inventory (VMI)Vendor-managed inventory (VMI) is an arrangement in which a distributor or manufacturer keeps a customer’s stock filled to agreed levels.
- Maintenance, repair and operations (MRO)Maintenance, repair and operations (MRO) supplies are what a business uses to keep its buildings, equipment and people working, not what it makes or sells.
- Value-added distributorA value-added distributor is a distributor that does extra work on what it sells, such as assembly, kitting, cutting to length or custom labeling.
- Consignment inventoryConsignment inventory is stock that sits at the customer’s site but belongs to the supplier until used, so the customer pays only for what it consumes.
