VMI - Vendor Managed Inventory - Supply Chain Optimization

Automate management of stock and optimize results with shared client, supplier and logistics information.

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Optimize your stocking processes with advanced algorithms that synchronize supply and demand

EDICOMVMI offers supply chain optimization through electronic data interchange between partners. This guarantees continuous supply at points of sale with minimum-safety stocks.

Implementing a continuous restocking planning project (CRP/VMI) requires consistent contact between clients and suppliers for continuous product stocking that is adjusted to real needs. 

A VMI project necessarily involves suppliers and distributors, and may also include logistics operators. 

EDICOMVMI runs advanced demand forecasting algorithms based on sales, stock, promotional or seasonal information that supply chain stakeholders share on an ongoing basis using electronic data interchange technologies.

EDICOMVMI adjusts freight and delivery schedules by configuring combined loads of several products.

 

Supply Chain Optimization

The information exchanged undergoes a complex mathematical analysis to estimate adjusted demand. The allows for order processing adapted to real client needs based upon:

  • Sales records, consumption rates, stock-outs, stock reduction, etc.
  • Promotions that produce upticks in demand at specific times.
  • Schedule records to estimate increase or decrease of demand according to the season.
  • Product shelf life.
  • Transport vehicle capacity.
  • Storage capacity at the destination.

Benefits of VMI

Stocking automation generates benefits for numerous aspects of company management.

Elimination of stock-outs

Elimination of stock-outs

VMI systems enable an efficient response to consumers, keeping stocks constantly adjusted to consumption patterns at the point of sale.

Resource optimization

Resource optimization

By not having to reserve so much space in warehouses, you can have sales forecasts well in advance, plan supply and optimize transportation.

Cost reduction

Cost reduction

These improvements result in a significant reduction of direct costs in stock management, seasonal product adjustment, etc.

Lower inventories of products and raw materials

Lower inventories of products and raw materials

A stock adjusted to demand means lower inventories of goods and raw materials, which drives operational and management improvements, particularly in the case of perishable products.

Increase in sales figures

Increase in sales figures

The elimination of stock-outs results in regular and stable consumption patterns that improve the service provided and increase the number of product units sold at the point of sale.

Improved financial ratios

Improved financial ratios

Inventory reduction, increased sales, transaction optimization and long-term demand forecasts result in increased revenue or adjusted cash flow forecasts over time that allow for better financial management for both the customer and the supplier.

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How does the VMI system work?

1

Agreement

The supplier and distributor must agree and participate in the implementation of a VMI system. The distributor provides periodic information on its sales or stock through outbound EDI messages to the supplier.

2

Receiving

The supplier receives the information and submits it to mathematical demand forecasting processes before using the results to establish a procurement plan to ensure service and avoid stock-outs at the distributor's facilities.

3

Automation

The provider's VMI solution automates the process, sending pertinent shipping alert messages to the EDI client's solution, along with product supply details.

VMI System Processes

Know ahead of time what happens in each VMI system process.

EDI Exchanges in the VMI System

EDI makes it possible to exchange messages in a standardized format that is understandable to both the client and the supplier, and to integrate the information into the ERP for online processing with the companies' management systems.

  • Clients or distributors send their sales figures to the supplier on a regular basis (daily, weekly, etc.) using standard documents such as EDIFACT, X12, XML.
  • They can also send information about stock at different points of sale or make deliveries using standard EDI messages.
  • The supplier's EDI solution receives the stock and/or sales documents and converts the EDI standard into a data structure to be parsed, leaving the information ready to be processed by VMI applications.

Data Analysis and Sales Forecasting

Sales and stock information received by the supplier must be processed by specific data analysis and demand estimation applications.

These applications carry out a detailed analysis of the information exchanged with the customer, can consider information recorded in the ERP and match the supplier's internal data with that sent by the customer via EDI.

The demand forecasting system applies mathematical algorithms to the data to calculate product requirements at the point of sale. These studies consider particular issues such as minimum orders, vehicle capacity, promotions, seasonal sales, and more.

Automated Stocking and Shipping Processes

Data analysis and subsequent estimation of demand over time must be specified in the detailed shipments of cargo to the distribution point.

For this, aggregate consumption forecasts must be specified in partial product deliveries to meet end-customer demand over time.

VMI FLOW takes the demand forecast figures and establishes purchase orders or shipping advice messages processed via EDI and sent to inform the customer in advance of product shipments to be made.

Benefits of the VMI System for Partners

How does it benefit suppliers?

  • Demand is seen in advance in order to adjust production and delivery plans. This contributes to the optimization of resources and results in fewer order issues, which reduces costs.

  • Purchasing can be better matched to raw material orders, reducing stock quantities. The supplier obtains a stable order forecast over time, resulting in better financial ratios and tighter cash flow forecasts.

  • It eliminates stock-outs at the point of sale, increasing sales and driving a better image for the end customer because they always find the product they are looking for.

How does it benefit distributors?

  • The distributor is guaranteed on-time delivery to its points of sale. Stock is optimally maintained to serve end clients, improving internal processes and reducing costs. There are even more benefits in the case of perishable products, as continuous on-time replenishment is guaranteed.

  • VMI improved the end-client experience and facilitates flexible store management, all with less products.

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