Description
The PPT explains about Vendor Managed Inventory and its basics. It compares the conventional fulfillment process with the VMI based fulfillment process.
Vendor Managed Inventory
Vendor Managed Inventory-VMI
Information
Supplier/ Vendor
Maintain Inventory
Retailer/ Manufacturer
EDI-Electronic Data Interchange
?
Electronic Data Interchange (EDI) can be formally defined as 'The transfer of structured data, by agreed message standards, from one computer system to another without human intervention'.
EDI Documents used in VMI
• 850 Purchase Orders • 852 Product Activity • 855 Purchase Order Acknowledgement • 856 Advance Ship Notice • 810 Invoice
Conventional Fulfillment Process
VMI Fulfillment Process
Management Commitment, Buy-in from Inventory Staff
Data Synchronization and EDI setup
Agreements and Data Exchange
Activities involved in VMI
Ordering, Invoice Matching
Measurement
Example: Axle Requirements by M&M
Vendor/Supplier
Retailer/ Manufacturer
Jan’08 500 05/01/08 Jan’08 500 07/01/08 Jan’08 300 18/01/08
Jan’08 M&M Review Date 610 15/12/07
Jan’08 610 28/12/07
Benefits of VMI
Retailer Benefits: ? Reduced inventory ? Reduced stock-out costs ? Reduced forecasting and purchasing activities ? Increase in Sales Supplier Benefits: ? Improved visibility helps better forecasting ? Reduced PO errors and potential returns ? Improvement in SLA ? Encourages supply chain co-operation
Challenges of VMI
Continuing “Manufacture to stock” Vs. leveraging on customer data ? Providing priority to VMI partners resulting in shortages to other customers ? Insufficient level of integration leads to incomplete visibility ? High expectations by retailers.
?
Overcoming VMI Limitations
?
Incentives based on partnership building, not on sales figures
Building Partnerships Effective Communication
Continued support
Share Information completely
Contd..
Simulations and Pilot runs ? Training sessions for personnel ? Define process to handle exceptions ? Set reasonable/achievable targets
?
VMI-“Win-Win Strategy” for both Retailers and Suppliers
References
?
Websites
? www.vendormanagedinventory.com ? www.wikipedia.org
?
White Paper-VMI in Retail Industry, published by TCS
doc_880529218.pptx
The PPT explains about Vendor Managed Inventory and its basics. It compares the conventional fulfillment process with the VMI based fulfillment process.
Vendor Managed Inventory
Vendor Managed Inventory-VMI
Information
Supplier/ Vendor
Maintain Inventory
Retailer/ Manufacturer
EDI-Electronic Data Interchange
?
Electronic Data Interchange (EDI) can be formally defined as 'The transfer of structured data, by agreed message standards, from one computer system to another without human intervention'.
EDI Documents used in VMI
• 850 Purchase Orders • 852 Product Activity • 855 Purchase Order Acknowledgement • 856 Advance Ship Notice • 810 Invoice
Conventional Fulfillment Process
VMI Fulfillment Process
Management Commitment, Buy-in from Inventory Staff
Data Synchronization and EDI setup
Agreements and Data Exchange
Activities involved in VMI
Ordering, Invoice Matching
Measurement
Example: Axle Requirements by M&M
Vendor/Supplier
Retailer/ Manufacturer
Jan’08 500 05/01/08 Jan’08 500 07/01/08 Jan’08 300 18/01/08
Jan’08 M&M Review Date 610 15/12/07
Jan’08 610 28/12/07
Benefits of VMI
Retailer Benefits: ? Reduced inventory ? Reduced stock-out costs ? Reduced forecasting and purchasing activities ? Increase in Sales Supplier Benefits: ? Improved visibility helps better forecasting ? Reduced PO errors and potential returns ? Improvement in SLA ? Encourages supply chain co-operation
Challenges of VMI
Continuing “Manufacture to stock” Vs. leveraging on customer data ? Providing priority to VMI partners resulting in shortages to other customers ? Insufficient level of integration leads to incomplete visibility ? High expectations by retailers.
?
Overcoming VMI Limitations
?
Incentives based on partnership building, not on sales figures
Building Partnerships Effective Communication
Continued support
Share Information completely
Contd..
Simulations and Pilot runs ? Training sessions for personnel ? Define process to handle exceptions ? Set reasonable/achievable targets
?
VMI-“Win-Win Strategy” for both Retailers and Suppliers
References
?
Websites
? www.vendormanagedinventory.com ? www.wikipedia.org
?
White Paper-VMI in Retail Industry, published by TCS
doc_880529218.pptx