Vendor Managed Inventory (VMI)

Suryanarayana Murthy Teegela

14/06/2010
VMI

Agenda
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Overview about VMI Pre-requisites for Oracle VMI Oracle Architecture for VMI Collaborative Planning Configurations for VMI VMI Benefits Option 1: Standard VMI Option 2: VMI with consignment model

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Overview on VMI
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Vendor Managed Inventory (VMI) is a procurement and planning practice in which a company delegates key inventory management functions to one or more of its suppliers. Under this arrangement the supplier determines the items, quantities, and delivery schedules on behalf of the customer based on information it receives from the customers inventory and procurement systems. Using VMI, manufacturers and distributors can anticipate customer needs and provide inventory more proactively than is possible using traditional procurement methods This Presentation will address how VMI can be accomplished by using a single, well-integrated suite of applications ( Oracle )

VMI

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Pre-Requisites for VMI

4 Oracle Applications 11i prior to 11.5.10.2 with the following modules Oracle Inventory Oracle Purchasing Oracle Planning (APS) Collaborative planning is installed and Configured iSupplier Portal integrated with Collaborative planning for Supplier Collaboration (Optional) For VMI with Consignment model following modules need to be at 11.5.10.2

Oracle Inventory Oracle Purchasing Oracle Payables Cost Management Warehouse Management

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Oracle Architecture for VMI

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Collaborative Planning
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VMI Configuration Steps

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Enable VMI at the ASL level (Item Vendor Combination) Enter threshold values and other VMI related parameters at ASL level Setup VMI related profile options Run initial Data collection with complete refresh including user

company association Run VMI Replenishment Engine in Collaborative planning after data collection Configure Planner Workbench to handle VMI exceptions by Planners Optionally Configure to do Auto Replenishment by checking Allow Automatic checkbox at ASL Configure isupplier portal to be linked to Collaborative planning to effectively use Supplier Collaboration

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VMI Benefits
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Benefit for the supplier: The ability to access customer on-hand quantity information, forecast information, minimum and maximum inventory thresholds, in-transit inventory quantities and expected receipt dates in order to determine when to ship goods The ability to manually execute an approved purchase requisition or blanket release on the customer system and to track the status of the order through receipt, storage, and consumption by the customer The ability to automate replenishment proposals Benefit for the customer: The ability to differentiate between goods that must be replenished by a supplier from those which are internally planned and replenished The ability to consume VMI materials in Work-In-Process or to explicitly take responsibility for planning from the supplier as needed The ability to better estimate suppliers production schedules based on anticipated demand from the customer.

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Option 1: Oracle VMI

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Option2: Oracle VMI with Consignment

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