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May 23, 2017

5/23/2017 02:00:00 PM


Vendor Managment Inventory Model

Purchase Order :Vendor managed Inventory

Vendor Managed Inventory:


Typical business model:
. Vendor Managed Inventory model:
Consignment Inventory:
When a distributor needs product, they place an order against a manufacturer. The distributor is in total control of the timing and size of the order being placed. The distributor maintains the inventory plan.
 The manufacturer receives electronic data (usually via EDI or the internet) that tells him the distributor’s sales and stock levels. The manufacturer can view every item that the distributor carriers as well as true point of sale data. The manufacturer is responsible for creating and maintaining the inventory plan. Under VMI, the manufacturer generates the order*, not the distributor.

*Note: VMI does not change the "ownership" of inventory. It remains as it did prior to VMI.

When the supplier places inventory at a customer’s location and retains ownership of the inventory. Payment is not made until the item is actually sold. A VMI relationship may or may not involve consignment inventory.

MIN MAX Planning

In Min-Max Planning, the enterprise attempts to maintaining the on-hand quantity
of a particular item between low (minimum) and a high (maximum) specified
limits, as defined in the item’s definition for that organization. (This can also be
defined at the master item level)

Reorder Point Planning

Reorder Point Planning is used to decide when to order additional quantity to avoid
dipping into safety stock. You can use Reorder Point Planning in conjunction with
VMI if you maintain your safety stock as ‘internally replenished stock’ and you
routinely consume the VMI stock replenished by one or more suppliers.
In order for these two replenishment processes to coexist, they need to be
completely independent from each other.

MRP Planning

This section applies to both Oracle Material Requirement Planning (MRP) and
Oracle Advanced Supply Chain Planning (ASCP).
You can use MRP Planning to plan for your internally replenished stock while you
delegate the replenishment responsibility for the VMI stock to your supplier. In this
case, however, MRP needs to balance the total demand against the total supply,
including both the internally replenished stock and the VMI stock.
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