How companies can effectively implement vmi managed inventory essay

The so-called VMI (Vendor Managed Inventory) is a cooperative strategy that aims to minimize the cost of both the user and the supplier, to manage the inventory by the supplier under a ****same agreement, and to continuously monitor the implementation of the agreement and amend the agreement, so as to make continuous improvement in inventory management. [1]

This inventory management strategy breaks away from the traditional fragmented inventory management model. Reflects the integrated management of the supply chain thinking, to adapt to the requirements of market changes, is a new, representative of the inventory management ideas. At present, the role of VMI in the distribution chain is very important, so it has been more and more attention.

For Vendor Managed Inventory (VMI), because there is a minimum and maximum inventory point, on-time delivery can be measured by the relative inventory level. For example, if inventory is zero, the risk is high; if inventory is below the minimum point, the risk is quite high; if inventory is above the maximum point, the risk of out-of-stock is small but the risk of expired inventory is elevated. In this way, the statistics of each of the above scenarios can be used to measure the supplier's delivery performance. According to the future demand for materials and the supplier's delivery plan, you can also predict the inventory point in the future trend, so as to determine the specific time of the specific inventory indicators.

VMI management model is from the QR (Quick Response, Quick Response) and ECR (Effective Customer Response, Efficient Customer Response) on the basis of the development of the core idea is that the supplier through the *** enjoy the user's enterprise's current inventory and the actual consumption data, in accordance with the actual consumption model, the consumption trend and replenishment strategy for replenishment with actual basis. As a result, both sides of the transaction have changed the traditional independent forecasting model, minimizing the waste of business, logistics and information flow due to the uncertainty of independent forecasting, and reducing the total cost of the supply chain.