VMI

SNUG Vendor Managed Inventory (VMI) with World & E1 Southern New England User Group October 17, 2008SNUG Agenda • Introductions • VMI Vision • What Is and Is Not VMI • What you can do to get Started TODAY • VMI Road Map • Q&A SNUG Your Vendor Managed Inventory The VisionSNUG The Market • How do you believe that VMI will position you differently from your Competitors • How will you deliver VMI to the Market • Why does VMI add value for your MarketSNUG The VMI Vision • What is You Managements vision for VMI – Enhance Market Position with VMI – Provide Customer Value – Rapid Deployment of VMI strategy – Use Current Infrastructure to start VMI and then expand as required – Expand VMI from the first test Customer to entire customer base QuicklySNUG What Is VMISNUGDesign and Deploy Customer-specific Fulfillment and Logistics Services Receive items Check inventory status Ship items Order Materials Ship items VMI Agreement (with customer) Sales/DIST MFG SUPPLIER Reduce inventory carrying costs VMI Agreement Received items Pay on Sale Send consumption advice CUSTOMER Send Demand advice MFGSNUGDesign and Deploy Customer-specific Fulfillment and Logistics Services Receive items Check inventory status Ship items Order Materials VMI Agreement Received items Pay on Sale Ship items VMI Agreement (with customer) Send consumption advice CUSTOMER Sales/DIST MFG SUPPLIER Reduce inventory carrying costs Send Demand advice MFG Push PullSNUGVENDOR MANAGED INVENTORY • Vendor Managed Inventory (VMI) is a planning and management system in which the vendor is responsible for maintaining the customer’s inventory levels. • Instead of the customer monitoring the sales and inventory for triggering replenishment orders, the vendor assumes responsibility for these activities. SNUGVENDOR MANAGED INVENTORY • Consignment inventory is an extension of the VMI program where the vendor places inventory at the customers location while retaining ownership of the inventory. • Inventory payment is not made until the inventory is actually resold or consumed by the customer SNUG BENEFITS OF VMI • Relevance of forecasting – Using Different Models – Shorter Forecast Cycles • Lower demand uncertainty – Sales Activity In Real Time • Reduced inventory requirements – Balanced Inventory Supply/Demand • Reduction of stock returns – Ship Only What Will Sell • Improved customer retention – You Are In This TogetherSNUG Customer Benefits • Reduction in planning and ordering cost • Reduction in stock-outs and overall inventory level • Improved supplier service SNUG Dual Benefits • Reduction in data entry errors • Better service to the end-consumer • Forging alliances SNUG CONSIGNMENT INVENTORY & OWNERSHIP TRANSFER MODELS • Pay as sold (real-time) • Pay as sold during a pre-defined period • Ownership changes after a pre-defined period • Order to order consignmentSNUG RISKS AND PITFALLS FOR VMI • Cost of developing VMI system • Invoicing problems • Cash-flow problems • Information availability /technology issues • Promotion/Events • Over/Obsolete stock SNUG VMI AgreementSNUG Forecasting An Agreement • Company Goals • Units – Marketing – Planning – Manufacturing – Finance • Dollars – Finance • Fill Rate – Sales /Marketing – C Level 0 10 20 30 40 50 60 70 80 90 100 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Units Dollars Fill RateSNUG Key Points to be covered in VMI agreement • What should be the level of consigned inventory? • What is trigger for transfer of ownership? Is it realtime sales or period end sales? • What is the Freight policy? • What is the over/obsolete stock policy? • Who holds responsibility for damaged or lost inventory? • Who holds responsibility for slow moving inventory? • What is the periodicity, content and mode of data interchange? SNUG VMI Care and Feeding • It is not a quick exercise • It is Information Utilization – Duration between replenishment – Inventory Investment – Forecast /Sales • Requires a Plan that both You and the Customer agree on. – Information Turnaround – Who Does What – Financial ResponsibilitySNUG VMI Care and Feeding • Requires review and adjustments at defined intervals – Cycle Count of Inventory – Information Flow Review – Sales /Forecast Adjustment – Retail Facings vs. Stock Room AvailabilitySNUG VMI Care and Feeding • Must fit into the firms strategic and financial directions – What is our market objective • Product • Customer – What is our financial objects for Inventory and Sales • From a company perspective • From a store perspectiveSNUG VMI Road MapSNUG VMI Road Map • How efficiently will I need to get data to and from the customer to execute the plan • What level of inventory am I willing to absorb on the customers shelves • How long will it take for me to respond to a replenishment order • How long does it take for me to manufacture products • Can my present systems respond to the demands of expanded VMISNUG What you can do to get started TODAYSNUGWhat you can do to get Started TODAY • JDE World has the basic build block to start the process – Transfer Orders – Inventory Visibility – Sales and A/R – Inventory Counts • Bar Code can support the process • Training • To be Fully Deployable you will need moreSNUG VMI Road Map • Current Systems can get you started and assist in providing a test bed • They will show the customer that you have the capability to execute VMI but to be successful you will need to demonstrate Ease Of Use and Ease Of Implementation • More current technology will be required to expend VMI – Customer Self Service Portals – WEB Based Access (both for information and reporting) – Excel Uploads and Downloads (reduce data entry requirement for some customers locations) – Work Flow – Email notification to keep Customer informed on shipment and Shipment ChangesSNUG SampleVMI Road Map • Current Footprint – Foundation – Financials – Distribution – Manufacturing • Upgrade VMI Footprint – System Foundation – Technical Foundation – Additional Financial Capability – Sales Order Processing Enhanced – Inventory – Add Customer Self Service – Add Internal Users – UPK • VMI Vision • What Is and Is Not VMI • What you can do to get Started TODAY • VMI Road Map SNUG SNUG Q&A SNUGSNUG UPKSNUG •Leverage Standard Workflow Templates •Graphical Tool for Building /Modifying Workflows •Integrates with standard email (Outlook, Lotus Notes etc.) Workflow: Automating Business ProcessesSNUGSNUG R Export to or Import from Excel or Word Grid Import/ExportSNUG Grid Customization ExampleGrid Formats • Highlight columns • Fonts /Color • Field width/sequence. • Sort Order • User, Role, PublicSNUGSNUG Media Object Attachments Attachments attach multiple files to any row • URLs/Web Sites, • Text • Pictures • Autocad drawings • Scanned files • Video -training • Audio • Spreadsheets • Word documents • OLE Objects • etcSNUG Query by Example Query by example • “on the fly” queries • <, >, =, operators • combine criteria • wild card • avoid reports Save frequently used queriesSNUGDesign and Deploy Customer-specific Fulfillment and Logistics Services Receive items Check inventory status Ship items Order Materials VMI Agreement Received items Pay on Sale Ship items VMI Agreement (with customer) Send consumption advice CUSTOMER Sales/DIST MFG SUPPLIER Reduce inventory carrying costs Send Demand advice MFGSNUGSNUGSNUGSNUGSNUGDesign and Deploy Customer-specific Fulfillment and Logistics Services Receive items Check inventory status Ship items Order Materials VMI Agreement Received items Pay on Sale Ship items VMI Agreement (with customer) Send consumption advice CUSTOMER Sales/DIST MFG SUPPLIER Reduce inventory carrying costs Send Demand advice MFG VMI ReconciliationSNUGDesign and Deploy Customer-specific Fulfillment and Logistics Services Receive items Check inventory status Ship items Order Materials VMI Agreement Received items Pay on Sale Ship items VMI Agreement (with customer) Send consumption advice CUSTOMER Sales/DIST MFG SUPPLIER Reduce inventory carrying costs Send Demand advice MFG