vendor managed inventory - loghealthloghealth.mahidol.ac.th/file/file-9-23-2015-6-38-34-pm.pdf ·...
TRANSCRIPT
EDI/VMI Concept : Retails Business 2
What is Supply Chain?
Products
Cash
Information
ManufacturerSupplier
Tier 2RetailerWholesaler Consumers
Return
Supply Chain = Entities + Flows
Supplier
Tier 1
EDI/VMI Concept : Retails Business 3
Supply Chain Development has advanced rapidly over the past twodecades, with significant change expected in the near future
Themes of Supply Chain Development
ConsumerProduction DistributionSupply
2000’s
Customer Sophistication
Power of IT
Extended
Enterprise
ConsumerProduction DistributionSupply
1990’s
ECR
(Retail Industry)
Cross-
functional
Production DistributionSupply
1980’s
JIT
(Automotive Industry)
FunctionalConsumer
IndustrialTrend
EDI/VMI Concept : Retails Business 4
External Supply Chain
4
Supply Chain Development Evolution
Internal Supply Chain
Stage (1)
Functional Focus
(1) The efforts tend to be confined within SILO Functions by focused on internal improvement
Stage (2)
Internal Integration
(2) Break down internal walls, and works on corporate integration. The various parts of the company start to cooperate and align
Stage (3)
External Integration
(3) Take external view and closer focus on the Customer Satisfaction by brings Trading Partners and suppliers into the discussions, start collaborating and sharing information
Stage (4)
Cross-Enterprise
Collaboration
(4) Move toward truly automated connections between businesses. Partners share information electronically, which lowers production cycle times. Inventory can be viewed on a real-time basis so forecasting errors can be diminished.
EDI/VMI Concept : Retails Business 5
The key to effective Supply Chain Management is
supply chain integration - ensuring that all part of the
supply chain work together, rather than at cross-purposes.
Product range and flow of goods
StoresLogistic and
InfrastructureSuppliers
Communicating Demand
Efficient Supply Chain Management
EDI/VMI Concept : Retails Business 7
Life before VMI – Group Discussion
• รอการอนมตเปด PR/PO • รหส สนคาผด• ไมไดรบ PO • รออนมตวงเงน• ลกคา Order จ านวนมากผดปกต• สงจ านวนนอยไมสามารถสงได • ออเดอรดวน• Unbalance Workload
EDI/VMI Concept : Retails Business 9
ตวอยำง VMI ในธรกจคำปลก
Continuous Replenishment Program (CRP) is Top10 Supply Chain Innovation
Since 1987 (2530)
EDI/VMI Concept : Retails Business 10
Inventory Management Evolution
VMI initiatives emerged in 1987 when department stores such as Wal-Mart moved to automated VMI. The apparel industry has continued to be a pioneer in VMI ever since.
EDI/VMI Concept : Retails Business 11
source suppliers manufacturesdistributors
retailers/customers
consumers/end users
source suppliers manufacturesdistributors
retailers/customers
consumers/end users
Note: หำกมกำรแชรขอมลใหกน ท ำใหผท อยปลำยทำงสำมำรถคำดกำรณกำรผลตไดแมนย ำยงข น
การเตมเตมสนคาโดยใชความตองการของผบรโภคทแทจรงเปนตวขบเคลอน
CRP (Continuous Replenishment Program)
EDI/VMI Concept : Retails Business 12
Vendor Managed Inventory (VMI) is a partnership
whereby the supplier gets the responsibility of having
enough stock available at the Customer/Retailer's
Warehouse in order to meet the demand from the stores.
What is VMI?
But VMI is more than that: it is about
collaboration, it is about sharing data, together taking the responsibility to
meet the customers demand and
finding the best ways to achieve that.
EDI/VMI Concept : Retails Business 13
EDI Order Proposal
EDI INVTRPT
EDI PO
Product/Invoice
ReceivingShipping
Retailer / Customer DCSupplier DC Retailer StoreSupplier Factory
Product/Invoice
ReceivingShipping
Store Order
Product/ Packing List
ReceivingShipping
LT 24 - 48 Hrs.LT 20-24 Hrs.LT 12 Hrs.
Vendor Managed Inventory (VMI)
EDI/VMI Concept : Retails Business 14
เปนกำรจดกำรกำรไหลของสำรสนเทศ (Managing flow of information) ตลอดหวงโซอปทำน เพอใหเกดควำมตอเนอง
เพอลด “Bullwhip Effect”
VMI is SCM Best Practice
EDI/VMI Concept : Retails Business 16
VMI
Supplier Manufacturer DC
/ Factory
Customer/
Retailer DCRetailer Stores Consumers
Products
Integrated Information
Transportation
Extend VMIExtend VMI
VMI Business Model
Who we are in Supply Chain?
How is our Supply Chain Network?
EDI/VMI Concept : Retails Business 17
Ownership of Inventory
• Ownership transferred to customer/retailer upon receipt of goods at DC
• Ownership transferred to customer/retailer when goods ship from DC to Stores
• Ownership transferred to customer/retailer when goods sold to consumer from Stores
• Ownership transferred to customer/retailer upon receipt of goods at DC but payment due to Point-of-Sales information
EDI/VMI Concept : Retails Business 18
Management of Inventory
Customer managed their owned inventory
Supplier managed customer’s inventory with their system
Supplier managed customer’s inventory with customer’s system
EDI/VMI Concept : Retails Business 20
Why our company want to do VMI?
Why our customer want to do VMI?
Why our supplier want to do VMI?
Group Discussion
EDI/VMI Concept : Retails Business 21
Typical Benefits to Manufacturers / Suppliers
• Lower inventory investments (raw and finished)
• Better scheduling and planning
• Better market information
• Closer customer ties and preferred status
EDI/VMI Concept : Retails Business 22
Typical Benefits to Customers / Retailers
• Fewer stock-out with higher inventory turnover
• Better market information
• More optimal product mix
• Less inventory in channels (transfer costs)
• Lower administrative replenishment costs
EDI/VMI Concept : Retails Business 23
Benefit of VMI Project: Retailer
1. Reduction in Stock Cover Day
Result Initial value Target Current (May)
Stock cover day at DC (Days) 12.5 6 7
Stock Value at DC (MBaht) 17.8 11.2
For Example
VMI can reduce inventory level from 12.5 days to 7 days
that close to the Target and saving working capital
6.6 Million Baht. We also can reduce inventory holding
cost and more Space at our DC.
EDI/VMI Concept : Retails Business 24
2. Increase in Service Level
Result Initial value Target Current (May)
Service Level Supplier to DC 97.50% 98% 100%
Service Level DC to Store 98% 98% 100%
Out of stock at shelf 2% 1% 1%
For Example
VMI can improve service level higher than Target and
achieve out of stock at shelf 1% target. So we quite
sure that our products will always available for customer
and can minimizing loss sales opportunities (increase sales).
Supplier can do well because they have less SKU to manage.
Benefit of VMI Project: Retailer
EDI/VMI Concept : Retails Business 25
• Better and predictable delivering (quantities, time of delivery)• Less wastage in supply chain (Shelf Life)• Less rush orders / issues• Fully gain promotion margin
Benefit of VMI Project: Retailer
EDI/VMI Concept : Retails Business 26
• Increase performance (service level) and potential less out-of-
stock/increased sales
• Better and predictable ordering / delivering (also upstream) /
manufacturing
• Stabilize manufacturing planning (when retailer has large share of
volume of supplier)
• Decrease of inventory levels (if VMI is connected to manufacturing
/ planning process)
• Less wastage in supply chain (especially perishable products)
• Less rush orders / issues
• Simplified supply chain process
• Integral cost reductions
• Preferred supplier status
Benefit of VMI Project: Supplier
1. Pre-requisites
2. Framework
3. Development
4. Replenishment
5. Issues
6. Evaluation
Forecast quantityneeded at retailer
Define settings
Fra
new
ork
Develop VMI-agreement
Develo
pm
en
t
Send store orderdata
(including initial storeorder on promotions)
Performance datasend to evaluation
tool
Rep
len
ish
men
tIs
su
es
Evalu
atio
n
Content VMI-model: Products / shipping points Item / del ivery profi les Communication model / roles and
responsibi l i ties Metrics/ KPI's Type of model
Joint supplier andretailer activities
Retailer activities
Template
Template
START:Intention agreementNo forward buying
Legacysystems
Distribution
Ahold VMI Business model
Content VMI-agreement: Objectives Information exchange Resources and sponsorship Investments / costs and benefi ts Playing field / penalties and Bonusses T ime frame Evaluation / review cycle Resolution of disagreements Sign-off
Supplier activities
Send ASN /DesAdv to retailer
File: 20011109 Ahold VMI v21
Pre
-req
uis
ites
Build VMI-modeland shadow
testing
Create order toreceive shipment
Receival andcheck of shipment
Issues?
Shipment toretailer's
warehouse
Solve
Yes
No
Develop VMImodel
Historical data(including order
versus sales upl i ft)
OP
ER
AT
ION
AL
VM
I
CPFR salesforecast (1)
Calculateshipment order
Send inventorydata
Legacysystems
(1) To be used when CPFR is in place
Ahold Worldwide Exchange department
Henk van der Heide
VMI Business Process
EDI/VMI Concept : Retails Business 29
- Trust and Commitment
- EDI System, ebXML, RosettaNet
- Replenishment Software (VMI System)
- Comply with EAN/UCC Barcode Standard
- Manage all SKUs (Normal & Promotion)
- Reduce lead time less than 1 days
- Agreed in KPI and Target
- Committed Resources
- Stop Forward Buying
1.Pre-requisites
EDI/VMI Concept : Retails Business 30
Develop VMI Agreement- Objectives
- Information Exchange
- Resources and Sponsorship
- Investment
- Playing Field / KPI & Targets
- Time Frame
- Evaluation / Review Cycle
- Resolution of Disagreement
- Sign-off
2.Framework
EDI/VMI Concept : Retails Business 31
VMI Success Factors
• Top management commitment
• Focus on effort
• Trust and partnership between supply chain stakeholders
• Highly effective computer/information systems (EDI, Bar coding, Scanning)
• Competent manufacturers and the ability to forecast
• Willing stakeholders partners and patience
EDI/VMI Concept : Retails Business 32
0
2
4
6
8
10
12
14
16
be
fore
VM
I
be
fore
VM
I
be
fore
VM
I
Ja
n
Fe
b
Ma
r
Ap
r
Ma
y
Ju
n
Ju
ly
Au
g
Se
p
Oct
No
v
De
c
Da
ys
Co
ve
r
90
92
94
96
98
100
% S
erv
ice
Le
ve
l~ 50% stock reduction
(~7 days)
Service Level > 98% both Unilever to Tops
DC and Tops DC to Stores
Stock Cover Day Service ULT to Customer DC Service Customer DC to Stores
VMI Performance - Unilever
EDI/VMI Concept : Retails Business 33
VMI Results: DC Stock Level in Days
VMI Supplier Initial value Target Current (Jan)
P&G 18 7 10.8
Unilever 14 6 8.9
KC 14 6 6
KAO 20 6 6.1
Colgate 12 6 7.8
Dumex 12 6 6
Nestle 12 6 21.7
Sahaphat 19 6 13
Total 15 6 10
EDI/VMI Concept : Retails Business 34
VMI Supplier Initial value Target Current (Jan)
P&G 91% 99% 98%
Unilever 94% 98% 99.6%
KC 96% 98% 99%
KAO 90% 99% 99.8%
Colgate 96% 99% 98%
Dumex 93% 99% 87%
Nestle 91% 98% 98.5%
Sahaphat 93% 98% 94%
Total 93% 99% 97%
VMI Results: Service Level Supplier to Retailer DC