A Vendor-Managed Inventory (VMI) program for labels is a supply chain solution where your label supplier takes on the responsibility of monitoring your inventory and automatically replenishing stock, ensuring you never run out of labels.

Procurement and operations teams don’t need a lecture on the cost of labeling chaos. Stockouts stall lines. Overstocking ties up cash and warehousing space. Chasing approvals and reorders steals time from higher-value work. Because of this, many manufacturers are moving to vendor-managed inventory labels as a way to stabilize supply and trim carrying costs. Let’s break down what VMI is, how does VMI work for labels, and the gains you can expect from it. 

Ready to stabilize your label supply and reduce total cost? Get a free quote from the Systems Graphics team on a vendor-managed inventory plan.

What is Vendor-Managed Inventory (VMI)?

Vendor-Managed Inventory (VMI) is a partnership where your label supplier monitors agreed inventory levels and consumption signals, then plans, produces, and replenishes labels to targets you set. You’re not relinquishing ownership of your process. Instead, you’re outsourcing the day-to-day label inventory management to a partner with the systems, forecasting models, and press capacity to keep you in stock without ballooning counts on the shelf.

How a VMI partnership works

This is a partnership that works based on shared data. Your team provides demand signals like issue tickets or periodic usage reports. The converter builds a replenishment model around min/max levels, lead times, and SKU needs. With that model, they can schedule runs and reserve materials to hit your thresholds. The net effect is labels that appear by the dock door before you need them, while obsolete versions are quietly phased out as artwork updates are approved. 

The role of the supplier and the customer

The role is all about clear KPIs, not guesswork. The supplier and customer are in charge of: 

  • Supplier: 
    • Monitors, forecasts, produces, and replenishes
    • Manages plate/tooling libraries
    • Maintains raw material positions
    • Enforces version control so only approved art can be reordered.
  • Customer: 
    • Sets policy (SKUs in program, safety stock, change control)
    • Approves artwork
    • Signs off on service levels and review cadence.

What are the benefits of a VMI program for labels?

High-mix portfolios, frequent regulatory updates, and regional variants make labels one of the trickiest packaging items to manage. A well-designed VMI for label procurement untangles that complexity while improving cash discipline.

Reduced inventory costs

Overbuying labels is a silent tax. VMI compresses on-hand counts by aligning run sizes with true demand instead of outdated “just in case” estimates. Right-sized lots mean less money tied up in boxes of labels that might never see the production line. You’ll also see fewer rush fees, fewer partials, and less scrap when labels change. The effects compound over time, especially for large SKU families. 

Elimination of stockouts

Stockouts are expensive twice: once in downtime and again in expedited recovery. With vendor-managed inventory labels, the replenishment engine is preventative by design. Usage signals roll up into forecasted order points. The raw materials are then readied, and shipments are released automatically as you near your threshold. If you schedule seasonal ramps or promo windows, teh VMI plan flexes upstream, so labels aren’t a bottleneck at launch time. 

Increased operational efficiency

Every hour spent reconciling, chasing quotes, or triaging last-minute reorders is an hour not spent on strategic sourcing or OEE. VMI centralizes the administrative workload: consolidated releases, standardized pricing frameworks, and predictable deliveries. On the floor, clear version control and labeling SOPs reduce line confusion. In the pressroom, your converter bundles related SKUs, standardizes materials where possible, and locks in color so repeat runs are a snap. 

Improved forecasting and demand planning

A VMI program makes your demand visible and measurable at a granular level. By SKU, by plant, by month, you can see actual consumption versus plan. It closes the loop between assumptions and what’s really happening on the line. The feedback improves the forecast. VMI becomes both a supply plana nd a continuous improvement loop for packaging. 

Is a VMI program right for your business?

VMI is a fit when the hidden costs of firefighting exceed the investment in a structured program, and when you want predictable, auditable control without micromanaging every order.

Signs you might need a VMI solution

  • Frequent stockouts or last-minute expedites that ripple into overtime and missed ship windows.
  • High obsolescence from artwork updates, regulatory text changes, or seasonal SKUs.
  • Administrative drag forcing buyers to spend too much time on reorders and quote churn instead of supplier development.
  • Distributed plants with inconsistent label practices or conflicting counts.
  • Unclear version control causing mix-ups or rejections at the line or by retailers.

Key considerations before implementing VMI

You’ll want to treat VMI like any critical ops program. Define the service levels, clarify ownership, and select the SKUs carefully. Ensure your partner can supply both VMI solutions for packaging and the regulatory realities of your products. 

You’ll also need to align on data. Define what signals drive replenishment, who validates changes, and how exceptions should be managed. 

How Systems Graphics Delivers a Seamless VMI Experience

Systems Graphics builds VMI around one objective: steady labels, lower total cost, zero surprises. We start with a discovery session to map SKUs, plants, and historical usage. From there, we set min/max policies by criticality, establish artwork and version control, and calibrate replenishment to your MRP signals or kanban scans. We make reliability a non-negotiable. Systems Graphics maintains raw materials and files ready, so labels arrive before your lines even notice the buffer is dipping. 

Ready to stabilize your label supply and reduce total cost? Let’s design a VMI program that fits your plants, your portfolio, and your compliance needs. Get a free quote from the Systems Graphics team on creating a VMI program for your product lines. 

FAQ Section

Q: How much does a VMI program for labels cost? 

A: The cost of a VMI program can vary depending on your specific needs and the supplier. However, the cost savings from reduced inventory and fewer stockouts often outweigh the investment.

Q: Will I lose control over my label designs and specifications with VMI? 

A: No, you will still have complete control over your label designs and specifications. The VMI provider’s role is to manage the inventory of your approved labels.

Q: What kind of technology is used in a VMI program? 

A: VMI programs often use software to track inventory levels, monitor usage patterns, and automate reordering, providing both the customer and supplier with real-time visibility.