In VMI, the inventory at the buyer’s end is managed and monitored essentially by the supplier/vendor or the upstream supply chain partner.
Read this post by apparel industry expert, Mausmi Ambastha, to understand the concept better.
Introduction to Vendor Management Inventory Abu Talha
What is Supply Chain Management ? Integrating Management and information technology to flourish performance.
What Is Vendor Managed Inventory ?
1. Vendor Managed Inventory or VMI is a process where the vendor creates orders for their customers based on demand information that they receive from the customer. 2. VMI involves collaboration between suppliers and their customers which changes the traditional ordering process.
Schematic Diagram of VMI
WHY USE VMI ?
VMI removes the need for the customers to have significant safety stock. Lower inventories for the customer can lead to significant cost savings.
The customer can make profit from reduced purchasing costs. As the vendor receives data so the customer don’t need to produce purchasing costs ever.
Moreover, the need for purchase order corrections and reconciliation is removed which further reduces purchasing costs.
DUAL BENEFITS (both Supplier and Customer) 1. Less data errors and the overall speed of processing is increased. 2. Having aim to provide better service to the end consumer. 3. Purchase orders are generated on predefined basis. 4. Relation between suppliers and customers are getting strong enough.
Customer Benefits
1. A decrease in stockouts and a decrease in inventory levels. 2. Planning and ordering cost will be decreased. 3. Overall service level is elevated. 4. The customer is more focused in providing great service.
Suppliers Benefits
1. A reduction in customer ordering errors. 2. Promotions can be easily promoted to inventory plans. 3. Customers' point of sell data makes forecasting easier. 4. Philosophy to customer’s stock levels helps to identify priorities.
Comparison between VMI & RMI
Vendor Managed Inventory(VMI)
1. Vendor stocks the resources in suppliers premises. 2. Vendor is solely responsible for the stock availability. 3. VMI focuses on collaboration and share information between trading partners. 4. It is termed as a model of family business.
Retail Managed Inventory (RMI)
1. Supplier stocks the resources in buyer’s premises.2. Retailer is solely responsible for the stock availability. 3. RMI always focused on improving forecasting. 4. It is termed as business model of business.
Introduction to Vendor Management Inventory Abu Talha
What is Supply Chain Management ? Integrating Management and information technology to flourish performance.
What Is Vendor Managed Inventory ?
1. Vendor Managed Inventory or VMI is a process where the vendor creates orders for their customers based on demand information that they receive from the customer. 2. VMI involves collaboration between suppliers and their customers which changes the traditional ordering process.
Schematic Diagram of VMI
WHY USE VMI ?
VMI removes the need for the customers to have significant safety stock. Lower inventories for the customer can lead to significant cost savings.
The customer can make profit from reduced purchasing costs. As the vendor receives data so the customer don’t need to produce purchasing costs ever.
Moreover, the need for purchase order corrections and reconciliation is removed which further reduces purchasing costs.
DUAL BENEFITS (both Supplier and Customer) 1. Less data errors and the overall speed of processing is increased. 2. Having aim to provide better service to the end consumer. 3. Purchase orders are generated on predefined basis. 4. Relation between suppliers and customers are getting strong enough.
Customer Benefits
1. A decrease in stockouts and a decrease in inventory levels. 2. Planning and ordering cost will be decreased. 3. Overall service level is elevated. 4. The customer is more focused in providing great service.
Suppliers Benefits
1. A reduction in customer ordering errors. 2. Promotions can be easily promoted to inventory plans. 3. Customers' point of sell data makes forecasting easier. 4. Philosophy to customer’s stock levels helps to identify priorities.
Comparison between VMI & RMI
Vendor Managed Inventory(VMI)
1. Vendor stocks the resources in suppliers premises. 2. Vendor is solely responsible for the stock availability. 3. VMI focuses on collaboration and share information between trading partners. 4. It is termed as a model of family business.
Retail Managed Inventory (RMI)
1. Supplier stocks the resources in buyer’s premises.2. Retailer is solely responsible for the stock availability. 3. RMI always focused on improving forecasting. 4. It is termed as business model of business.
This presentation deals with the basics of Supply Chain Management.It gives short notes on what is it that makes a complete supply chain network and industrial terminologies are explained here.
Supply Chain Inventory And Logistics PowerPoint Presentation Slides SlideTeam
Presenting this set of slides with name - Supply Chain Inventory And Logistics Powerpoint Presentation Slides. This presentation comprises a total of seventynine slides. Each slide focuses on one of the aspects of Supply Chain Inventory And Logistics Powerpoint Presentation Slides with content extensively researched by our business research team. Our team of PPT designers used the best of professional PowerPoint templates, images, icons and layouts. Also included are impressive, editable data visualization tools like charts, graphs and tables. When you download this presentation by clicking the Download button, you get the presentation in both standard and widescreen format. All slides are fully customizable. Change the colors, font, size, add and remove things as per your need and present before your audience.
This presentation deals with the basics of Supply Chain Management.It gives short notes on what is it that makes a complete supply chain network and industrial terminologies are explained here.
Supply Chain Inventory And Logistics PowerPoint Presentation Slides SlideTeam
Presenting this set of slides with name - Supply Chain Inventory And Logistics Powerpoint Presentation Slides. This presentation comprises a total of seventynine slides. Each slide focuses on one of the aspects of Supply Chain Inventory And Logistics Powerpoint Presentation Slides with content extensively researched by our business research team. Our team of PPT designers used the best of professional PowerPoint templates, images, icons and layouts. Also included are impressive, editable data visualization tools like charts, graphs and tables. When you download this presentation by clicking the Download button, you get the presentation in both standard and widescreen format. All slides are fully customizable. Change the colors, font, size, add and remove things as per your need and present before your audience.
Inventory Management: How Incremental Improvements Drive Big GainsCognizant
By feeding social and mobile data into planning systems and overlaying analytics, manufacturers and retailers can reduce inventory waste and more precisely target customers.
SBS recently conducted a survey to better understand the motivation behind the purchasing decision. Not surprisingly, respondents indicated that cost, lead time and quality were the 3 driving motivations. VMI capabilities ranked a distant 6th. But, VMI helps manage and reduce costs, lead times and quality issues. So shouldn't it be the driving force behind selecting a supplier?
The presentation explains the fundamentals of supply chain, supply chain management and inventory management. A simple analogy is used to conceptualize the basics of supply chain and inventory management. This is part 1 of a 5 part series which which starts with this presentation- What is Supply Chain and will end with How to Manage your Supply Chain.
Grocery Inventory Management Software Development in 2023.pdfTechugo
Grocery inventory management software is a tool designed to help grocery store owners and managers track and manage the inventory of their products. It allows them to efficiently track stock levels, monitor sales and purchase data, and create automatic reorder points.
Good grocery inventory management software can help you manage shrinkage. It also allows you to track inventory data in real-time to aid you in understanding the stock’s life cycle. You can organize older products and items with a shorter lifespan, so they are sold first.
Mark Fasold, Strategic Advisor to Falls River Group (FRG) – IMAP USA, shares with Creating Value the guiding principles companies should follow to optimize their supply chains including the vital dos and don’ts.
After implementing RFID, Macy’s has reduced its inventory accuracy deterioration to 3%-5% from 30%. American Apparel has cut the time it take associates to count items on the sales floor to 2 hours from 6 hours. “This is technology that has proven effective in our testing, and we believe now is the right time to roll out RFID aggressively," said Tom Cole, Chief Administrative Officer of Macy's, Inc. In this session, industry experts will discuss the fact that 2013 could be the year of the perfect storm of RFID implementations: technology costs have dropped significantly; and more companies are proving that RFID creates inventory efficiencies, improves loss prevention and saves money.
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Introduction
Johnny Depp is an actor known for his chameleon-like ability to transform into a wide range of characters. from the eccentric Captain Jack Sparrow in "Pirates of the Caribbean" to the introspective Edward Scissorhands. His long hair is one constant throughout his evolving roles and public appearances. Johnny Depp long hair is not a style choice but a significant aspect of his identity. contributing to his allure and mystique. This article explores the journey and significance of Johnny Depp long hair. highlighting how it has become integral to his brand.
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What is a vendor-managed inventory system?
1.
2. CONCEPT
• Managing Inventory is one of the biggest tasks at hand any organization has.
• Ensuring it is under the specified level, simultaneously making sure it does
not run out when needed, is a herculean task in itself.
3. WHAT IS VMI
• Vendor managed inventory or VMI as known commonly, is an integrated inventory
management approach that offers relief from the inventory concerns.
• In VMI the inventory at the buyer’s end is managed and monitored essentially by the
supplier/vendor or the upstream supply chain partner.
“Vendor Managed Inventory is the term for inventory management systems where the
supplier manages the day to day inventory activity. In a VMI relationship, the manufacturer
becomes responsible for the management of his customer's inventory.” (Pol, Inamdar, 2012)
4. WHAT IS VMI
• VMI is a reverse inventory replenishment process that electronically connects supply chain
partners to felicitate demand and inventory replenishment planning based on real-time
demand information sharing between them.
• One of the most common instances of VMI implementation in business is the relationship
between Walmart and P&G, where P&G is responsible for managing the agreed inventory of
P&G products on Wal-Mart’s store shelf space based on the real-time sales data shared by
Walmart.
5. WHY SHOULD ONE IMPLEMENT VMI
• VMI offers a symbiotic relationship. Hence, it reduces the chances of stock out occurrences
along with ensured inventory reduction.
• Also, to manage and monitor the consumption, the vendor might place its representatives on
site, at the retailer’s end.
• This way the vendor can ensure that her product display at the store is as per her expectations,
and the retail staffs at the store are also aware or accustomed with the product features which
will aid not just the retailer but the vendor in increasing the sales of her products.
• VMI offers the benefit of shared risks between the two involved parties, i.e. if the inventory
fails to sell off the shelves, the vendor might repurchase it from the retailer or the ownership
of the product might have been with the vendor until final sales take place, an arrangement
known as ‘consignment’.
6. WHY SHOULD ONE IMPLEMENT VMI
• VMI offers a symbiotic relationship. Hence, it reduces the chances of stock out occurrences
along with ensured inventory reduction.
• Also, to manage and monitor the consumption, the vendor might place its representatives on
site, at the retailer’s end.
• This way the vendor can ensure that her product display at the store is as per her expectations,
and the retail staffs at the store are also aware or accustomed with the product features which
will aid not just the retailer but the vendor in increasing the sales of her products.
7. WHY SHOULD ONE IMPLEMENT VMI
• VMI offers the benefit of shared risks between the two involved parties, i.e. if the inventory
fails to sell off the shelves, the vendor might repurchase it from the retailer or the ownership
of the product might have been with the vendor until final sales take place, an arrangement
known as ‘consignment’.
• VMI implementation is beneficial especially in retail industry and consumer packaged goods,
where the product demand is relatively stable with short term fluctuations.
• Also, high volume but smaller sized or smaller monetary value products can be managed by VMI.
8. VARIATIONS OF VMI
There are two popular VMI variations based on the parties involved in the program:
1. Inventory-driven VMI
– The VMI relationship between manufacturer and its suppliers
– Manufacturers have the forecasting control in their hands.
2. Consumption-driven VMI
– The VMI relationship between retailers and their vendors
– The forecasting control is in the hands of the vendor based on the point of sale
information available.
– Inventory replenishment is driven by the consumption on the point of sale at the retailer’s
location rather than inventory levels at the retailer’s location.
9. COMMON MISTAKES MADE
WHEN IMPLEMENTING VMI
• VMI implementation is long term plan and requires continuous involvement and efforts from
both the parties involved.
• Hence, development of a clearly defined and practical implementation plan is crucial
for VMI’s success.
• The biggest roadblock to VMI’s success will be keeping and monitoring the internal
resources allocation.
10. COMMON MISTAKES MADE
WHEN IMPLEMENTING VMI
• Before organization-wide system implementation, or before bring the system live, the team
should ensure all the involved internal elements of software, people, and processes are aligned
well and functioning as needed.
• Pilot runs and prototype tests can be beneficial to avoid any glitches in the system once actual
work starts.
• The most common mistake that can happen is to forget the people who are involved. VMI
cannot be implemented successfully without proper change management and people
involvement.
• Hence proper planning and training of the buyers, technicians, planners and the other auxiliary
staff involved is crucial.
11. Benefits of VMI to the Buyer
• Reduced inventory as the safety stocks needed earlier is reduced considerably.
• Reduced stock-outs / shortages as the supplier manages his own inventory rather than the
retailer who is managing thousands of products from hundreds of suppliers.
• Higher sales as the stock outs are reduced.
• Reduced administrative and labour costs of daily inventory management and planning and
order processing.
12. Benefits of VMI to the Supplier
• Reduction in safety stocks as the actual real-time demand information is readily available
due to increased visibility.
• Reduction in errors related to the purchase orders.
• The actual customer need can be foreseen and hence supplier can plan her operations
accordingly.
• Strategic relationships are formed with the buyers.
13. VMI LIMITATIONS
• It can encourage the vendor to directly cater to the customers in future, as they get the
information and idea as to what the customer needs and demands and how the customer need
can be fulfilled.
• Also, the actual customer experience now shifts from the hands of the retailer to the hands on
the vendor and thus can backfire if not managed properly.
• Though these disadvantages can deter a company in implementing VMI, but they can
counter by better engagement and forming long-term strategic partnerships with the vendors
in the first place.
14. References
S.M. Disney, D.R. Towill (1980). Vendor-Managed inventory and bullwhip reduction in a two-level supply
chain. International Journal of Operations & Production Management, Volume 23, Issue 6, Pages 625-
651. doi:
10.1108/01443570310476654
Yuliang Yao, Philips T. Evers, Martin E. Dresner (March 2007). Supply chain integration in vendor-
managed inventory. Decision Support Systems, Volume 43, Issue 2, Pages 663-674.
doi:10.1016/j.dss.2005.05.021
S.M. Disney, D.R. Towill (11 August 2003). The effect of vendor managed inventory (VMI) dynamics on
the Bullwhip Effect in supply chains. International Journal of Production Economics, Volume 85, Issue
2, Pages 199-215. doi: 10.1016/S0925-5273(03)00110-5
Sila Centinkaya, Chung-Yee Lee (1 February 2000). Stock replenishment and shipment scheduling for
vendor-managed inventory systems. Management Science, Volume 46, Issue 2, Pages 217-232. doi:
10.1287/mnsc.46.2.217.11923
G.J. Pol, K.H. Inamdar (July 2012). Framework to implementation for vendor managed inventory.
International Journal of Engineering Research and Development, Volume 2, Issue 3, Pages 46-50. eISSN
: 2278-067X, pISSN : 2278-800X, www.ijerd.com
15. For an elaborate insight on the topic, visit
www.stitchdiary.com