Vendor managed inventory

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Vendor-managed inventory ( VMI ), also known as supplier -managed inventory or supplier-managed inventory ( SMI ), is a logistical means of improving performance in the supply chain, in which the supplier has access to the customer's inventory and demand data.

Basics

With VMI, the supplier assumes responsibility for the customer’s inventory of his products. The inventory at the customer is completely initiated by the supplier. In return, the customer is often granted the full right of return. The basis for calculating the deliveries are e.g. B. Consumption or sales figures, which are either recorded by the supplier during regular replenishment, or can also be transmitted electronically.

concept

There are basically three concepts. In the first form ( Continuous Replenishment ), the supplier visits the customer at regular intervals, determines the shortage there for the next delivery and delivers the shortage determined during the last visit (typical e.g. for fasteners in industry).

In the second form (classic VMI), the customer determines his consumption and transmits this data to the supplier, who uses the agreed data to determine the point in time at which further deliveries will take place. However, no explicit purchase order from the customer is required for this delivery. The downstream commercial processes (invoicing) are generally not changed by VMI.

In the third form (consignment inventory), the supplier is in fact the owner of a part of the dealer warehouse, which he can equip as required.

These processes are increasingly being mapped via so-called electronic marketplaces .

criticism

advantages

  • Fast response from the supplier to fluctuations in demand
  • higher level of service, avoidance of out-of-stock situations in retail
  • Greater responsibility and more freedom for the supplier when scheduling deliveries
  • cheaper batch sizes
  • low stocks at the dealer
  • increasing sales and reduced return quantities due to needs-based subsequent deliveries
  • Optimization of the supplier's transports
  • The supplier knows the sales of comparable dealers and can therefore predict demand more precisely than the dealer himself

disadvantage

  • high investment costs
  • difficult success measurement
  • not necessarily applicable to the entire range
  • Insight into the "internal structure" (including business data) of a company by the supplier
  • Greater dependence on the supplier
  • it may no longer be possible to assign the expense to the relevant period.

See also

literature

  • Karl Simacek: Vendor Managed Inventory (VMI) - Or who should plan in the future . In: Andreas von der Heydt (Ed.): Handbook Efficient Consumer Response . Franz Vahlen, Munich 1999, ISBN 3-8006-2279-3 .
  • Horst Tempelmeier: Inventory management in supply chains . 2nd Edition. Books on Demand, Norderstedt 2006, ISBN 3-8334-5032-0 .
  • Peter D. Franke: Vendor-Managed Inventory for High Value Parts . Ed .: Frank Straube. 1st edition. University Press of the TU Berlin, Berlin 2010, ISBN 978-3-7983-2211-0 .