Vendor Management Inventory
Optimize stocks rolling out VMI

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Provisioning Management

Frequently Asked Questions

What goals does VMI pursue?

One of the main aims of the Vendor Managed Inventory system is to reduce stocks throughout the supply chain and guarantee the shipping of full deliveries, while doing away with stockouts at point of sale.

What is the scope of VMI?

It takes in the whole supply chain, initially involving suppliers and distributors, followed by other agents such as logistics operators. The specific rollout model will depend on the distribution system used by manufacturers and distributors; logistic platforms or distribution centers may also be involved in the process, or even individual shops and stores.

What is the basic working process in a VMI model?

Supplier and distributor must agree and get involved in the rollout of a VMI system. Both must share a specific working procedure, starting out with the distributor providing periodic information on their sales and/or stocks, which are sent to the supplier or manufacturer by electronic means. The manufacturer then processes them with special IT applications to draw up a demand forecast which is translated as the delivery of goods at their destination. Delivery of shipments takes place automatically with no need for customer and distributor to issue specific orders, simplifying the working and administrative processes for both partners.

Can I include issues such as promotions or seasonality in the forecast model?

VMI applications must be able to integrate different demand forecast systems to adapt to the many possible market scenarios. EDICOM solutions are able, among other things, to tailor forecasts to questions as varied as promotions, sales seasonality, vehicle loading capacities, transport cost optimization, making up combined shipments of several products, etc.

What are the benefits for the supplier?

It lets them know the demand forecasts in advance and adjust their production and delivery plans more accurately. This helps optimize the available resources and means fewer incidents in orders, which in the end results in lower costs.

All these aspects help improve the processes involved in providing this service to the customer: Purchasing departments can fine-tune their orders for raw materials, so there are fewer in store and there is a stable forecast of orders over time, which eventually allows better financial ratios and more precise cash flow forecasts.

Point-of-sale stockouts are eliminated, which ultimately leads to an increase in sales and helps create a better perception in the distributor of the service supplied by the provider.

What are the benefits for the distributor?

Distributors are guaranteed proper on-time delivery at their points of sale. Optimum stock to service end customers is kept up, representing operational improvements and cost reductions. In the case of perishable goods, it likewise ensures continuous timely replenishment with practically no shrinkage.

Rolling out VMI improves customer service by eliminating stockouts and provides more flexible warehouse management, with fewer products.

All these circumstances are ultimately translated into increased sales at lower cost, which leads to improved commercial benefit ratios.

Advantages

  • No more stockouts
  • Fewer inventories in customer and supplier warehouses
  • Optimum planning and use of resources in product production and delivery
  • Shorter provisioning times
  • Cutting operational and financial costs
  • Increased sales

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