Implementation.

Refinement. Improvements that may be made in the light of experience including the resolution of technical difficulties encountered subsequent to implementation.

EDI Documents Used in VMI

There are two EDI transactions at the heart of the process. The first is the Product Activity Record, frequently referred to as an 852. The data contained in this document are sales and inventory information. The inventory data is typically segmented into various groups such as on hand, on order, committed, back ordered and so forth. This transaction is the backbone of VMI and is sent by the customer on a pre-arranged schedule, typically, daily. The decision to order is based on this data.

The business process fed by this data is relatively simple. The supplier reviews the information that has been sent in by the customer on the 852 to determine if an order is needed. This review of the data varies by supplier and the software being used, but many things are consistent.

The first step is to verify the data as accurate and meaningful. Depending on the software, much of this verification is automated.

On a scheduled basis, the software calculates a reorder point for each item based on the movement data and any overrides contributed by the customer or supplier. These overrides might include information such as promotions, projects, seasonality, new items and so forth.

The VMI software compares the quantity available at the customer with the re-order point for each item at each location. This determines if an order is needed.

The order quantities are then calculated. Typically, calculation of order quantities takes into account such issues as carton quantities and transaction costs.

This completes the order build process.

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* Contributed by -
Guruprasad Pasupulety,
MBA - Batch of 2007,
Tallinn University of Technology, Estonia.