vendor managed inventory :: essays research papers

Vendor Managed scrutinizeVendor Managed Inventory is a means of optimizing provide mountain range performance, in which the producer is responsible for maintaining the distributors breed levels. The manufacturer has access to the distributors inventory data and is responsible for generating purchase orders. During this process, the provider is guided by specified objectives regarding inventory levels, fill rates, and transaction costs.A typical business model without VMI entails that when a distributor needs product, they mooring an order against a manufacturer. The distributor is in total control of the quantify and size of the order being placed. The distributor maintains the inventory plan.However, when utilizing the Vendor Managed Inventory model, the manufacturer receives electronic data, usually EDI(Electronic Data Interchange) or via the internet, that tells him the distributors sales and transmission line levels. The manufacturer mass then view every item that th e distributor carriers as well as true point of sale data. The manufacturer becomes responsible for creating and maintaining the inventory plan. Under VMI, the manufacturer generates the order, not the distributor. Note that VMI does not change the "ownership" of inventory. It remains as it did prior to VMI.VMI consists of two EDI minutes that are the basis of the process     Product Activity Record the data contained in this document are sales and inventory entropy. This is the primary transaction     The second transaction contains and deals with the product numbers and the quantities ordered by the provider as the customer requestsIn all of its forms VMI should be about alter visibility of carry and product flow in a come out chain, facilitating a more timely and accurate replenishment process amidst a supplier (vendor) and an inventory site (customer, distributor, distribution center, etc). The application of VMI can be at an y point within a lend chainManufacturer Wholesale DistributorWholesale Distributor - retailManufacturer - End node Wholesale Distributor End CustomerManufacturer Internal Inventory SitesInventory is the proxy for information. In the absence of timely and accurate consumption data, each(prenominal) node in the supply chain compensates for the lack of information with inventory. Not only does poor information flow build supply chain inventories, but it also restricts each companys ability to react to increases in demand, causes extended outages, suffice interruptions and lost sales. As actual demand for products is disseminated up the supply chain in a more real time environment, the more nearly aligned production is with demand. As the gap between production and demand diminishes, so to does supply chain inventories and service level interruptions.