Previous

Part - III

Evolution of VMI

VMI initiatives emerged in the late 1980s when department stores such as Wal-Mart switched to an automated VMI. Ever since these initiatives are taken by industries, the apparel industry has continued to be leading the way in VMI.It is quite Ironical, but industries facing complex situations have been among the last to adopt automated VMI. For example, Supermarkets and malls have taken longer time than department stores in VMI implementation.

Vendor Managed Inventory: An Insight

As stated earlier Vendor-Managed Inventory (VMI) is a planning and management system that is not directly coupled to inventory ownership. The Concept of VMI is not a new concept, in the past years also many suppliers operated vendor-stocking programs where a company representative visited a customer a few times a month and replenished their inventories to an agreed-upon level. With VMI program, the representative visits are replaced by the information gathered from the cash registers and intern transmitted directly to a supplier's computer system via Electronic Data Interchange (EDI) as popularized by WALL MART. Now, suppliers can keep an eye on sales of their products and decide when to initiate the replenishment procedure.

In more detailed description, the VMI process is a blend of e-commerce, software and people. The e-commerce layer is the means through which companies communicate the data. VMI is not tied to a specific communications protocol. VMI data can be communicated via EDI, XML, FTP or any other communications method. The distinct feature of the e-commerce layer is that the data that is communicated is timely and accurate.

VMI Process Steps

There are three important VMI models, which describes the whole processes.

Authority Transfer Model

A Mandated Transfer model is another process where the inventory management cost and other activities regarding the inventory are transferred to the vendors by the buying organization. Transferring these activities is the prime goal of any buying organization.

Next

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