Roll.

No Names

33. Sharda Rao

34. Bhavana Sundaram
35. Tamali Nandi
35. Megha Rastogi
mhoose the correct answer

1. Optimizes supply chain performance

2. Supplier has access to customer¶s inventory data
3. Supplier is responsible for maintaining the inventory level required
by the customer
4. The process is to resupply inventory by the vendor via scheduled
reviews
5. All of the above
V efinition and Introduction of Vendor Managed Inventory
V ata Transferred Method
V WHY VMI?
V Benefits of Vendor Managed Inventory
V Potential Pitfalls of Vendor Managed Inventory
V Martha-Wilson-Model
V Four Stages of the Fully Automated VMI Model
V Keys to Success
The VMI process is a combination of
e-commerce, software and people.
The e-commerce layer is the
mechanism through which companies
communicate data .VMI data can
be communicated via EI (electronic
data interchange), XML (extensible
markup language),FTP(file transfer protocol)
or any other reliable communication
method. The key feature of the e-commerce
layer is that the data be timely and accurate.
 A means of optimizing Supply mhain performance in which the manufacturer is responsible
for maintaining the distributor¶s inventory levels. The manufacturer has access to the
distributor¶s inventory data and is responsible for generating purchase orders.






 
 




 

V è


 


  When a distributor needs product, they place an
order against a manufacturer.

V 
 




 
 
 manufacturer receives electronic data (usually
via EI or the internet) that tells him the distributor stock levels. The manufacturer is
responsible for creating and maintaining the inventory plan.

Under VMI, the manufacturer generates the order, not the distributors
V Success in supply chain management usually derives from understanding and
managing the relationship between inventory cost and the customer service level.

V VMI should be about improving visibility of demand and product flow in a supply
chain, facilitating a more timely and accurate replenishment process between a
supplier (vendor) and an inventory site (customer, distributor, distribution center,
etc«)
UAL BENEFITS:

V ata entry errors are reduced due to computer to computer communications.

V Both parties are interested in giving better service to the end customer.
V A true partnership is formed between the Manufacturer and the istributor.
V Stabilize the timing of Purchase Orders
V Increased Service Level To The End mustomer

ISTRIBUTOR BENEFITS:

V The goal is to have an improvement in Fill Rates from the manufacturer and to the end
customer. Also, a decrease in stock-outs and a decrease in inventory levels.
V Planning and ordering cost will decrease
V The overall service level is improved by having the right product at the right time.
V The manufacturer is more focused than ever on providing great service.
V Increased Sales
V Visibility of the istributor¶s Point of Sale data makes forecasting easier.

V Promotions can be more easily incorporated into the inventory plan.

V A reduction in istributor ordering errors (which in the past would probably

lead to a return)

V Visibility of Stock Levels helps to identify priorities (replenishing for stock or

a stock-out?). Before VMI, a manufacturer has no visibility of the quantity
and the products that are ordered. With VMI, the manufacturer can see the
potential need for an item before the item is ordered.
6
  :
V This reduces costs by permitting better resource utilization for production
and transportation
V it also reduces the need for large buffer stocks, which has additional cost.
V transportation costs are reduced with VMI.

 
 


V service is usually assessed by measuring product availability.
V coordination of replenishment orders and deliveries across multiple
customers helps to improve service.
V the supplier can prioritizing customer shipments effectively
V stock balancing can be achieved
 Although VMI has many benefits, it also has its potential pitfalls. Here are the
common ones and how to avoid them:

V 4 
 
Extensive EI testing should be done to validate the data being sent. Is the
distributor sending all the data that should be sent? Is each field populated with the
correct data?

V ˜

Make sure that all employees involved in the process fully understand and accept
this new way of doing business. It's not enough to just sell the concept to senior
management, all employees who are involved must be willing participants.

V ð  
4

Anything that adds or takes away from the normal ordering pattern must be properly
communicated to the manufacturer.
V  

Any large customers, either gained or lost, must be communicated to the
manufacturer. The distributor must guide the manufacturer on how this will
affect sales.

V @@ 
 

An agreement must exist between the manufacturer and the distributor on what
to do if an overstock does occur (or in the case of an ordering error). Also, both
parties must agree on how to handle obsolete stock.

V  
Both parties involved must understand that this is a learning process. Errors will
occur. You will probably not have a perfect process in place day 1.
 Four parameters to determine The performance measures are :
performance measures :

V Retail Inventory V Unfilled retail customer orders

V Warehouse inventory V Maximum number of goods in transit

V Subassembly goods in transit V Maximum inventory level

V Raw materials in transit V Average inventory level

`   

 ð


4


! ˜

Examples:
Milliken and mompany:
The lead time from order receipt at Milliken¶s textile plants to final clothing receipt at
several of the department stores involved was reduced from eighteen weeks down
to three weeks.

VMI allows vendors to high-volume retailers such as, WAL-MART to quickly

identify accelerated sell-through, optimize store assortments and easily react to
market or regional changes.

VMI Projects have shown sales increases of 20 to 25 percent, and 30 percent

inventory turnover improvements.
 one effectively, VMI delivers tangible results throughout the supply chain.
As the concepts and practices of µlean¶ extend beyond the manufacturing
floor down through the supply chain, VMI is the enabling process to drive
out costs and time. To ensure you realize the full impact of the VMI
experience, follow these keys to success:

1. Set, review and maintain performance goals

2. Manage all SKU¶s through VMI to minimize supply chain transactions
3. Spend the time and effort up front to ensure data accuracy
4. Utilize local market intelligence to augment the automated replenishment
decisions
5. monduct periodic performance reviews
6. Use the metrics to find cost and inefficiencies, then work together to
eliminate.