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【正文】 of cases and pallets Freight and Distribution Coordination Warehousing and Inventory Management Minor Assembly and Packaging Procurement 6 Difference between traditional business model and VMI model Traditional VMI Purchase Order Placement When a customer needs product, they place an order against a manufacturer. Under VMI, the vendor generates the order, not the customer. Inventory Transparency Only order is transmitted to supplier when product is needed. The vendor can view the “realtime” stock level of every item that the customer carries as well as true point of consumption data. Inventory Replenishment The customer is in total control of the timing and size of the order being placed. The vendor is in total control of the timing and size of the order being placed. Inventory Plan The customer maintains the inventory plan. The vendor is responsible for creating and maintaining the inventory plan. 7 Simplest VMI workflow Manufacturer Suppliers 2 3 4 1 1. The manufacturer approves the purchasing terms with suppliers, including the monly agreed inventory responsibility and maintenance scheme. 2. The manufacturer sends product activity data to the supplier. This product activity is based on warehouse movement of product consumed at the assembly line level. 3. Based on the agreed inventory maintenance scheme, the supplier edits, approves and releases the suggested purchase order. 4. The manufacturer approves this purchase order and send it to the supplier. 8 Consolidation and Loading Center is monly used to reduce the plexity in coordinating multiple vendors ? Quality of delivery services from vendors to lineside might be different ? Vendors’ shipping volume might be very small given more frequent ―demandpull‖ orders ? Vendors might need a large lineside buffer to prise a fulltruck load and makeup a safety stock ? Large lineside area is needed to acplish unpacking, kitting, and possibly sequencing of parts before feeding to assembly line ? Individual vendors might rent warehouses for themselves, with limited scale to share with other vendors ? Consistent delivery service to lineside ? Optimal shipping volume to reduce transportation cost and inventory cost ? Reduced requirement on lineside warehouse space ? Coordination between suppliers and production line possible to promote synchronization and JIT How Consolidation and Loading Center Approach Helps Potential Issues in Simplest VMI Model 9 Winwin situation can be achieved for both manufacturers … ? Planning and ordering costs for the manufacturer go down due to the responsibility being shifted to the vendor ? Improved customer service – vendors can better respond to customers’ inventory needs in terms of both quantity and location ? Reduced demand uncertainty – by constantly monitoring customers’ inventor
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