Vendor Managed Inventory (VMI) and Collaborative Replenishment is a proven approach to streamlining inventory management and order fulfillment that improves collaboration between suppliers and their distribution partners by aligning business objectives and optimizing operations for all participants.
You may be asking, what is the difference between VMI and Collaborative Replenishment. It’s simple, Collaborative Replenishment is an evolution of VMI that includes trading partners working together to ensure an efficient inventory management program. It goes far beyond the capabilities of what traditional VMI is thought of including things like truck building, available to promise and more. It offers companies more choices by enabling orders to be launched by any trading partner, offering multiple routes to market, and utilizing various types of demand signals. In all, collaborative replenishment is a more flexible approach to supply chain management, but at is core Collaborative Replenishment includes VMI and all its benefits.
Increase Sales and Supply Chain Efficiency, Reduce Errors and Time Draining Rework
VMI changes the traditional ordering process by empowering suppliers to recommend orders for distribution partners. Combining data from both supplier and seller, this collaborative approach improves supply chain performance through improved order accuracy and reduced rework. Other benefits include faster inventory turns, higher in-stock percentages and increased sales.
How VMI Works
- TrueCommerce Datalliance receives data (called a Product Activity Report) from a distribution partner
- This report contains data about things like sales, product transfers and inventory positions (on hand, on order, in transit)
- Our VMI platform reviews the data and sends a recommended replenishment order based on key factors and agreed objectives
- The supplier reviews and approves the recommendations
- The VMI platform then sends a PO to the supplier and a PO acknowledgement to the distribution partner
- Once the partner approves the PO, the order can be shipped
Monitoring and Reporting
When supply chain partners begin using VMI, they agree upon objectives for:
- Inventory turns
- Fill rates and in-stock percentages
- Transaction costs
The VMI platform monitors actual activity with measurements against those objectives. Data is always available to all parties on demand. The system also alerts all parties when measurements fall outside acceptable ranges or data anomalies are detected (e.g., missing/incomplete data).
Business Results of Vendor Managed InventoryKey Features of the VMI Solution
- Leading-edge data acquisition, replenishment order generation and analysis tools to streamline the VMI process end-to-end
- A wide range of advanced capabilities enable VMI partners to automate more tasks and perform more functions than you would ever expect from “traditional” VMI
- Expert support and services from the TrueCommerce Datalliance Customer Care team—so you can focus on serving your customers
Why stop at VMI? Collaborative replenishment offers even more ways for growing partner networks to manage replenishment together. Collaborative replenishment:
- Empowers any supply chain partner to suggest or recommend an order
- Offers multiple routes to market
- Utilizes more demand-signal types