Vendor Managed Inventory 1008
-
Upload
mohantymamali -
Category
Documents
-
view
240 -
download
1
Transcript of Vendor Managed Inventory 1008
-
8/4/2019 Vendor Managed Inventory 1008
1/16
VENDOR MANAGEDINVENTORY
How to Get the Best
Results
-
8/4/2019 Vendor Managed Inventory 1008
2/16
Total Business Consulting Group, Inc. 2
Agenda
What Is Vendor-ManagedInventory (VMI)
ObjectivesWorking Cases
Preparation
Information Systems Issues
Assessment and Agreement
Measurements
-
8/4/2019 Vendor Managed Inventory 1008
3/16
Total Business Consulting Group, Inc. 3
What Is Vendor-Managed Inventory?
Choose the correct answer:
1. Optimizes supply chain performance2. Supplier has access to customers inventory
data
3. Supplier is responsible for maintaining the
inventory level required by the customer4. The process is to resupply inventory by the
vendor via scheduled reviews
5. All of the above
-
8/4/2019 Vendor Managed Inventory 1008
4/16
Total Business Consulting Group, Inc. 4
Vendor-Managed Inventories
It has been anevolution:
Stock
replenishmentRetail
Consignment
Systems contracts
Standardmaterials
Scrutinizedinventory
Customer
B
Customer
C
Customer
A
Vendor
-
8/4/2019 Vendor Managed Inventory 1008
5/16
Total Business Consulting Group, Inc. 5
Objectives
Customer Reduced inventory
Reduced operatingcosts
Total cost reduced
Purchasing andadministrative costs
Fewer suppliers
IntangiblesShorter cycle time
Greater customersatisfaction
Supplier Increased volume
Forces disciplines
Measurements
Communication
Better planning andresource use
Visibility via
information sharing Need to eliminate or
reduce non-value-added activities
-
8/4/2019 Vendor Managed Inventory 1008
6/16
Total Business Consulting Group, Inc. 6
Working Cases
Retail Corning
Wal-Mart (Quick ResponseProgram)
Industrial
Bose (unique planning)
Rohm-Haas (MRO)
Shamrock Supply
(integrator) Shell (unique)
Contract Manufacturing(various)
-
8/4/2019 Vendor Managed Inventory 1008
7/16
Total Business Consulting Group, Inc. 7
Preparation: Questions for
Selecting Materials
What are your intentions?
Reduce workload to concentrate on $$$
What are the critical materials/processes? Need consistency and reliability
Requires closer cooperation
Which items/commodities have attributed to the
greatest delays?What is important to your company?
-
8/4/2019 Vendor Managed Inventory 1008
8/16
Total Business Consulting Group, Inc. 8
Operational Practice
Considerations
Warehousing Alternatives
Supplier managed
Automatic replenishment (owned or managed)
Best for reasonable degree of predictability
Appropriate directly to point of use Two-bin or eyeball control levels periodic
Managed on customer site
Supplier personnel work as planners on customerbehalf
Works best when customer has a wide line card Utilizes customers planning/replenishment system
BE AWARE OF DATA ACCURACY/MANAGEMENT!!
-
8/4/2019 Vendor Managed Inventory 1008
9/16
Total Business Consulting Group, Inc. 9
Information Systems
Management
Sharinginformation How good are forecasts?
Typically poor
So what do you do?
Establish a baseline
What do we plan for?
Need to review
Who takes the lead?
How often is this done?
When does this go away?
-
8/4/2019 Vendor Managed Inventory 1008
10/16
Total Business Consulting Group, Inc. 10
Information Systems
(continued)
Reliability of data Control of activities
How well do we knowwhats happening in ourprocesses?
Procedures, flows,people deployment
Are we achieving whatis intended?
Measurements ofkey areas
On-handinventory
Stock outs
Aging
-
8/4/2019 Vendor Managed Inventory 1008
11/16
Total Business Consulting Group, Inc. 11
Assessment
Process status
Under control?
Remember the
pitfallsRecord reliability
Information sharing
Lacking skill sets
What are theresults?
What are thecorrective actions?
-
8/4/2019 Vendor Managed Inventory 1008
12/16
Total Business Consulting Group, Inc. 12
Creating an Agreement
Critical factors Identify the items
Define the points ofoperational responsibility
Storage, persons,quality, returns, etc..
Identify and monitorcosts
Develop service levelmeasures and note
reports to be used
What are thecorrective action stepsand timing?
-
8/4/2019 Vendor Managed Inventory 1008
13/16
Total Business Consulting Group, Inc.13
Agreement
(continued)
Factors (continued) Specify price escalators
and de-escalatorprocesses
Price changesrelated to businessconditions
Reference proceduresto be used
Timing/duration
Periodic audits
Termination clause
-
8/4/2019 Vendor Managed Inventory 1008
14/16
Total Business Consulting Group, Inc.14
Performance Measurements
How to ensure VMI will enhance thebusiness?
Establish measures identify the goalStarting number of items vs. potential
Inventory $ initially vs. potential
Total inventory $ at start, during, and after
Respective inventory turns and days of supply
-
8/4/2019 Vendor Managed Inventory 1008
15/16
Total Business Consulting Group, Inc. 15
Measurements
(continued)
Operational improvements
Internal
The number of stock outs and duration
Cost of material/service before and after
External
Customer satisfaction
Improvement of delivery availability
Other points as defined by the parties
Competitive advantage considerations
-
8/4/2019 Vendor Managed Inventory 1008
16/16
Total Business Consulting Group, Inc. 16
Whats Next?
Success Three Es
Execution
Energy
Excitement
Pilot then expandSuccess breedsdesire
Measure and adjustTHERE ISNT ANY
LUCK, JUST THEOPPORTUNITY TO
SUCCEED