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Vendor Managed Inventory or VMI is a process in which the vendor creates orders for its customers based on the needs it receives from the customer. The supplier and the customer are bound by an agreement fixing stocks, fill rates and costs. A supplier-managed inventory contract is a simple way to ensure that inventory arrives on time at the plant. Vendor Managed Inventory is a process in which the manufacturer takes care of the inventory for the retailer or distributor. A supplier-managed inventory contract is a simple way to ensure that stock arrives on time at the factory.3 min Read The supplier verifies the information received from the supplier and the search for a contract is concluded on the basis of an existing agreement between the supplier and the customer. The manufacturer can derive some benefits from the inventory managed by the supplier, since he has access to a customer`s pos (point of sale) data, which makes his prognosis a little easier. Manufacturers can also include their customers` advertising plans in forecasting models, which means there is enough inventory available when their promotions are in progress. The first is the product activity dataset, called 852. This EDI operation contains information about sales and inventories, such as major product activities and forecasting metrics, for example.B.

Some suppliers make available to their customers a delivery notice (ASN) to inform them of an in-depth order called EDI 856. With VMI, the supplier specifies the delivery volumes sent to customers through the distribution channel, using data from the electronic data interchange (EDI). There are a number of EDI transactions that can form the basis of the VMI process, 852.855 and 856. The second EDI transaction used in VMI is the order confirmation, called 855. This EDI document sent to the customer contains a number of areas, including: In the current business model, the distributor or distributor orders a product from the manufacturer. This gives the dealer control over the size and delivery of the order. The vendor managed inventory system connects the distributor and the distributor via an Internet or EDI connection. ASN differs from the order confirmation, both in time and in substance. The 856 is sent to the customer after shipment at the place of the time of the order. EDI 852 information can be sent by the customer to the supplier weekly or more frequently in large-scale industries.

The customer can also benefit from a reduced acquisition cost.