Part - I

Executive Summary

The Objective of writing the paper is to gain an understanding of whether and how companies are implementing Vendor Managed Inventory program and how it is proving to be a critical dimension of Supply Chain Management.

Vendor Managed Inventory popularly known as VMI is grabbing great momentum in todays business processes. In this era of cutthroat competition organizations are seriously looking for all the alternatives available for optimizing the supply chain processes that can intern reduce their costs, inventory levels and ultimately help industries to increase their profits. The primary requirement of an efficient supply chain management can be categorized in to 3Vs i.e. velocity, variability and visibility. All the optimization processes should concentrate on optimizing these three main and critical categories. Vendor Managed Inventory (VMI) is designed to facilitate to optimize the 3Vs and to provide major cost saving benefits to both Suppliers and their customers.

Introduction

The Business is primarily governed by the markets conditions and economic health of a country. In times of a weak economy, the business focus is entirely on customer retention and cost reduction. In good times, the focus changes from not only the basic issues but also some other important issues. The VMI solutions provide a best of breed approach to an organization, which is looking for the same results, both in good and bad times.

Vendor Managed Inventory (VMI) transpire in the late 1980's as a partnership program to streamline the replenishment decisions in a supply chain while keeping the independence of supply chain members. VMI is not only an important part of continuous replenishment program (CRP), it is also referred to as a program of supplier-managed inventory, or direct replenishment. In this partnership between a vendor and customer, the authority is transferred towards vendor side and the Vendor is the one who decides when and in what quantity the customer's stock is replenished. With such an agreement, the vendor may be able to share the customer's point-of-sale and inventory-level data.

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* Contributed by -
Sarang Aparajit,
PGDIE Class of 2005,
NITIE, Mumbai.