Vendor managed inventory for supply chain logistics optimisation

Automate stock management and optimise outcomes by leveraging information shared between customers, suppliers and logistics operators.

Get ahead of your demand and supply needs with full synchronisation of your supply chain

The rollout of a Vendor Management Inventory (VMI) or Continuous Replenishment Planning (CRP) project calls for ongoing customer-supplier partnerships for continuous product provisioning adjusted to real needs.

It covers the entire chain, engaging suppliers and distributors initially and logistics operators lastly.  The model will depend on the distribution system used, while the process may involve logistics platforms and distribution centres or even individual stores.

EDICOM VMI services are capable of adjusting forecasts to promotions, sales seasonality, vehicle loading capacity, freight optimisation, preparation of combined loads of various products, etc.

The system aims to cut stocks throughout the supply chain and complete product delivery shipment, eliminating stockouts at the outlet.

Maximise your supply chain management

Continuous replenishing systems are framed in the Efficient Consumer Response (ECR) initiative to provide end customers with the most value, best service and maximum product variety.

Full synchronisation is needed between demand and supply throughout the supply chain via data exchanges between the stakeholders involved in the service provision (supplier, distributor, logistics operator).

Exchanged information undergoes complex mathematical analysis to estimate an adjusted demand that makes it possible to process orders adapted to real customer needs on the basis of:

  • Sales records, consumption rates, stockouts, shrinkage, etc.
  • Promotions that could constitute demand peaks at given times.
  • Logs of schedules to estimate rises or falls in demand due to seasonality issues.
  • Product shelf life.
  • Size of transport assets.
  • Storage capacity at destination.

Benefits of a Vendor Managed Inventory system

Elimination of stockouts

Elimination of stockouts

VMI models enable an efficient response to consumers, maintaining permanent stock adjusted to consumer patterns at the outlet.
 

Resource optimisation

Resource optimisation

Because you don't have to set aside as much space in warehouses, can have sales forecasts available well in advance, plan supply orders and optimise transport.

Cost reduction

Cost reduction

All the specified improvements drive a significant direct cost reduction in stock management, product seasonality adjustment, etc.

Lower product and raw material inventories

Lower product and raw material inventories

Demand-adjusted product stock means lower goods and raw material inventories, powering operational and management improvements, particularly for perishable goods.

 

Increase in sales

Increase in sales

The disappearance of stockouts translates into regular and stable consumption patterns that enhance the service provided and boost the number of product units sold at the retail point.

 

Improved financial ratios

Improved financial ratios

Smaller inventories, rise in sales, optimisation of transactions and long-term demand forecasts, result in increased revenue or adjusted cash flow forecasts over time that enable better financial management for both customer and supplier.

How does a CRP/VMI system work?

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Supplier and distributor must agree on and engage in the implementation of a CRP system. The distributor provides regular information on its sales or stocks via outbound EDI messages to the supplier.

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The supplier receives the information and submits it to mathematical demand forecasting processes before harnessing the results to establish a provisioning plan that secures the service and prevents stockouts at the distributor’s facilities.

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The supplier's VMI solution automates the entire process, sending to the customer’s EDI solution the pertinent despatch advice messages along with details of the product to supply.

EDI exchanges in the CRP/VMI model

EDI makes it possible to exchange messages in a standardised format understandable to customer and supplier alike and to integrate information in the ERP for processing in line with the companies’ management systems.

  • Customers or distributors send their sales figures to the supplier on a regular basis (daily, weekly, etc.) using standard documents such as EDIFACT, X12, XML...
  • They can also send information on their stock of goods at the different outlets or freight deliveries using standard EDI messages too.
  • The supplier's EDI solution receives the stock and/or sales documents and converts the EDI standard into a data model for analysis, leaving the information ready for processing by the CRP/VMI applications.

Data analysis and sales forecasts

Sales and stock information received by the supplier must be processed by specific data analysis and demand estimate applications.

These apps allow a detailed analysis of the information exchanged with the customer and can also consider the figures recorded in the ERP and check the supplier’s internal data against that sent by the customer by EDI.

The demand forecasting system applies mathematical algorithms to the data to calculate product requirements at the outlet. These studies consider particular questions such as minimum orders, vehicle capacity, promotions, sales seasonality and more.

Automatic procurements and shipping process

The data analysis and subsequent demand estimate over time must be specified in the detailed cargo shipments to the distribution point.

To do so, aggregate consumption forecasts must be specified in partial product deliveries to satisfy end customer demand over time.

CRP FLOW takes the demand forecasting figures and establishes purchase orders or despatch advice messages processed via EDI and sent to inform the customer in advance of the product shipments to be made.

How does it benefit suppliers?

  • Makes it possible to know demand forecasts in advance so production and delivery plans can be adjusted. This contributes to resource optimisation and results in fewer order incidents, positively impacting cost reductions.

  • Purchases can be better adjusted to raw material orders, reducing amounts in storage. The supplier gets a stable forecast of orders over time which results in enhanced financial ratios and better-adjusted cash flow forecasts.

  • Eliminates stockouts at the outlet, increasing sales and driving a better image for the end customer who always finds the product they’re looking for.

How does it benefit distributors?

  • The distributor is guaranteed on-time delivery at its outlets. Optimal stock maintenance to serve end customers, enhancing internal processes and bringing down costs. Even more benefits in the case of perishable goods as on-time continuous replenishing is ensured with practically no shrinkage.

  • VMI implementation improves the end customer experience and facilitates more flexible warehouse management with a smaller number of products.