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Vendor-Management Inventory: Introduction
1. Vendor-management inventory (VMI) is a family ofbusiness models in
which the buyer of a product provides certain information to a supplier
of that product and the supplier takes full responsibility for maintaining an
agreed inventory of the material, usually at the buyer's consumption
location (usually a store).
2. Vendor Managed Inventory (VMI)by Park City Group is a great way to
manage your relationships with retailers and ensure that your inventory
levels are always at optimal levels.
3. Vendor-managed inventory (VMI) lets companies reduce overhead by
shifting responsibility for owning, managing, replenishing inventory to
vendors. Vendors track goods shipped to distributors and retail outlets,
and monitor retail supplies, enabling the vendors to replenish inventories
when supplies are low. The practice is common in the retail sector, and is
also used in other phases of supply chains. Not only do assets decrease,
the amount of working capital needed to operate a business decreases.
4. VMI is a means of optimizing Supply Chain performance in which the
manufacturer is responsible for maintaining the distributors inventory
levels. The manufacturer has access to the distributors inventory data andis responsible for generating purchase orders. To further define it, lets
look at 2 business models:
5. VMI means that third-party logistics provider can also be involved to
make sure that the buyer has the required level of inventory by adjusting
the demand and supply gaps.
6. VMI helps foster a closer understanding between the supplier and
manufacturer by using Electronic Data Interchange formats, EDI
software and statistical methodologies to forecast and maintain correct
inventory in the supply chain.
7. Vendor Managed Inventory simply means the vendor (the Manufacturer)
manages the inventory of the distributor. The manufacturer receives
electronic messages, usually via EDI, from the distributor. These messages
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tell the manufacturer various bits of information such as what the
distributor has sold and what they have currently in inventory. The
manufacturer reviews this information and decides when it is appropriate
to generate a Purchase Order.
To further explain Vendor Managed Inventory, lets look at an example. Prior to
implementing a VMI program, a Widget Distributor operated under a non-VMI business
model. It created an inventory plan, then monitored and controlled it's own inventory
levels. When the company felt it needed more inventory, they would place a Purchase
Order against the manufacturer. However, under a Vendor Managed Inventory setup, the
Widget Manufacturer would setup the Distributors inventory plan. The Manufacturer
would then monitor the Distributors inventory levels, keeping track of the sales and the
current inventory level. Once the Manufacturer believed the Distributors inventory levels
were too low, the Manufacturer would generate the Purchase Order and ship the product
to the Distributor. Vendor Managed Inventory gives the control over the inventory to the
Manufacturer.
Thus, Vendor Managed Inventory promotes a strong partnership between the
Manufacturer and the Distributor. Vendor Managed Inventory (VMI) is a streamlinedapproach to inventory management and order fulfillment. VMI involves collaboration
between suppliers and their customers (e.g. distributor, retailer, OEM, or product end
user) which changes the traditional ordering process.
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Vendor Managed Inventory (VMI): How does It Work
The goal of Vendor Managed Inventory is to provide a mutually beneficial relationship
where both sides will be able to more smoothly and accurately control the availability
In VMI a manufacturer or distributor assumes the role of inventory planning for the
customer. Extensive information sharing is required so that the manufacturer/distributor
can maintain a high degree of visibility of its goods at the customers location. Instead of
the customer reordering when its supply has been exhausted, the supplier is responsible
for replenishing and stocking the customer at appropriate levels. Wal-Mart has mastered
VMI and is the company against which many other organizations benchmark themselves.
How to make VMI work
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1, Clarify expectations.
There needs to be thorough discussion about how the system will benefit both
organizations in the long term or one of the parties, particularly the supplier, is
prone to disappointment with some of the short-term results. If these items are not
addressed the program will likely be terminated quickly with neither side gaining
any of the benefits expected from the program. The objective is clear and constant
communication between the supplier and customer. When the two parties work in
conjunction they can be assured that the planning function, for both sides, will
begin to smooth over time.
2. Agree on how to share information.
If the supplier and customer can agree to share information vital to restocking in a
timely manner, then the odds of a synchronized system will dramatically improve.
Proprietary information would not have to be shared between the supplier and
customer, but enough information to maintain a steady flow of goods is necessary.
3. Keep communication channels open.
When the two parties set out to implement a VMI program, they need to meet and
discuss their goals and how they need to proceed in order to realize those goals.
Once a VMI program has been activated, each side needs to understand that there
are going to be some miscues. These miscues need to be studied as opportunities
for learning and then used to avoid repetitive problems in the future.
How does the Manufacturer Monitor the Distributors inventory?
One of the ways a Manufacturer can monitor a Distributors inventory is through the use
of EDI (Electronic Data Interchange). Below we have listed a few of the EDI sets that
may be used.
EDI Documents used in VMI
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EDI is an integral part of VMI process. Some of the EDI transactions used in VMI are
listed below:
#852 - Product Activity - Sent by the Distributor
The distributors inventory level and product activity.
The standard #852 only transmits a "change" since the previous transmission. An
"All Item Refresh" sends every field for every item.
#855 - Recommend Replenishment - Sent by the Manufacturer.
The order the manufacturer has created.
#856/857 - Advanced Ship Notice - Sent by the Manufacturer.
Sent out right before the Shipment leaves the Manufacturer.
#861 - Receipt Advise - Sent by the Distributor.
What the Distributor actually Received. #810 - Invoice - Sent by the Manufacturer.
Electronic Billing.
#820 Payment/Remittance Advise - Sent by the Distributor.
How to start up a Vendor Managed Inventory program
There are 2 different ways to start up a VMI program.
1. Homemade System: Some companies decide to build their own software. It requires
expert knowledge in the area of VMI, Inventory Management and of course, a few good
programmers.
Benefits: The benefit of this type of system is that it can be customized
specifically for your business needs. You can build the system to reflect theuniqueness of your company.
Pitfalls: you must have a project group that includes true experts in VMI &
Inventory Management. They must have a true understanding of exactly how
Vendor Managed Inventory operates. This would include the EDI sets used as
well as how to construct a reliable inventory plan. Additionally, you may
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encounter issues with your programmers. Once your system is completed, will
they be available for future updates or enhancements? In most companies, the
project team would have the use of programmers only for a short period. Since
most VMI systems need to grow or improve over time, you'll need to have
programmers at your disposal on an ongoing basis. Most of the companies I have
spoken to that have built their own systems eventually decide to go with a Pre-
packaged System (see below).
2. PrePackaged: There are a few very good off the shelf VMI packages on the market
today. The software usually has most of the needed basic functionality. Usually it can be
customized to meet your companies specific needs.
Benefits: Most of these packages meet all of the standard VMI
Pitfalls: There may be additional charges for any customization you require. Also,
you can probably expect additional charges for periodic systems upgrades.
Unexpected demand changes by the customer need to be shared with the supplier.
Changes in demand could result from the customer acquiring a new, large customer
opening of a great deal of stores in a short period; or offering special promotions that
create spikes in demand. The supplier may be unable to schedule production or shipmentin a timely manner, causing a drop in inventory available for the customer to sell in the
event of a foreseen increase in demand. A spike in demand could also create a burden on
the supplier, who will have to reprioritize its production plan or inventory from one
customer to another.
Likewise, if the supplier is experiencing a significant spike in demand from a major
customer, it may be wise to let the VMI customer, and other customers as well, know that
the supplier will have very little flexibility over a certain period of time, so that everyone
can adjust accordingly.
The most common cause of VMI failure revolves around communication breakdowns.
All of these problems in implementing a VMI program can be significantly diminished if
they are adequately addressed at the beginning of discussions. Hence, there should be
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several in-depth meetings upfront to avoid problems down the road
Developments Jointly Managed Inventory: VMI is a stepping-stone toward an emerging
process called Jointly Managed Inventory. In Jointly Managed Inventory a partnership
between the supplier and customer is formed. This solidifies the current VMI
relationship. Jointly Managed Inventory (JMI) is a much more detailed extension of VMI
but the goals and premise are quite similar. It takes the foundation from which the
relationship has already been built and fine-tunes it. This partnership involves increased
tactical planning between the supplier and customer when developing JMI. This should
include, but is not limited to, the customer integrating the supplier into the customers
This integration allows the supplier to gain insight into real-time sales data to further
improve the replenishing function while being able to better plan its own
production/distribution system to meet the customers needs. Proceeding to this step will
further solidify the relationship and produce a favorable outcome for each party.
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Goals and Objectives:
Instead of sending purchase orders, customers electronically send daily demand
information to the supplier
The supplier generates replenishment orders for the customer based on this
demand information.:
Improved Inventory Turns
Improved Service
Increased Sales
The Vendor Managed Inventory (VMI) is essentially Electronic Data Interchange
(EDI) where the retailer has given their vendor access rights to their point-of-sale
(POS) system.
VMI makes it less likely that a business will unintentionally become out of stock
of a good and reduces inventory in the supply chain.
vendor (supplier) representatives in a store benefit the vendor by ensuring the
product is properly displayed and store staffs are familiar with the features of the
product line, all the while helping to clean and organize their product lines for the
store.
VMI work is shared risk..
A special form of this commission business is scan-based trading whereas VMI
is usually applied but not mandatory to be used.
vendors benefit from more control of displays and more contact to impart
knowledge on employees;
retailers benefit from reduced risk
better store staff knowledge (which builds brand loyalty for both the vendor and
the retailer), and reduced display maintenance outlays
Manage and maintain forecasts
Analyze or handle forecasts or inventory exceptions
Maintain forecasts and inventory parameters set by trading partners
Interface with trading partners regarding new products and promotions
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Prepare various performance reports and respond to problems in real time
Perform timely order maintenance
.
When a distributor needs product, they place an order against a manufacturer. The
distributor is in total control of the timing and size of the order being placed. The
distributor maintains the inventory plan. The manufacturer receives electronic data
(usually via EDI or the internet) that tells him the distributors sales and stock levels. The
manufacturer can view every item that the distributor carriers as well as true point of sale
data. The manufacturer is responsible for creating and maintaining the inventory plan.
Under VMI, the manufacturer generates the order*, not the distributor. VMI does not
change the "ownership" of inventory. It remains as it did prior to VMI.
When the supplier places inventory at a customers location and retains ownership of the
inventory. Payment is not made until the item is actually sold. A VMI relationship may or
may not involve consignment inventory.
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RESEARCH METHODOLOGY
RESEARCH
Research is a process in which the researchers wish to find out the end result for a given
problem and thus the solution helps in future course of action. The research has been
defined as A careful investigation or enquiry especially through search for new
facts in branch of knowledge
RESEARCH DESIGN
The research design used in this project is Analytical in nature the procedure using,
which researcher has to use facts or information already available, and analyze these to
make a critical evaluation of the performance.
DATA COLLECTION:
There are two types of sources for data collection:
Primary sources: primary sources are the sources which are collected for the first
time. No primary data is used in this study.
Secondary Sources: secondary sources are the sources based on the data have been
done earlier.
1. The data are collected from the annual reports
2. Data are collected from the websites.3. Books and journals pertaining to the topic.
TOOLS USED IN THE ANALYSIS
Economic Order Quantity.
Safety Stock.
ABC Analysis.
FSN Analysis.
Linear Regression method.
Inventory turnover ratios.
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ECONOMIC ORDER QUANTITY:
MEANING
A decision about how much to order has great significance in inventory management.
The quantity to be purchased should neither be small nor big because costs of buying and
carrying materials are very high. Economic order quantity is the size of the lot to be
purchased which is economically viable. This is the quantity of materials which can be
purchased at minimum costs. Generally economic order quantity is the point at which
inventory carrying costs are equal to order costs. In determining economic order quantity
it is assumed that cost of managing inventory is made up solely of two parts i.e., ordering
cost and carrying cost. The cost relationships are shown in below figure.
FORMULA FOR CALCULATING ECONOMIC ORDER QUANTITY
(EOQ)
SAFETY STOCK:
MEANING
The economic order quantity formula is developed based on assumption that the demand
is known and certain and that the lead time is constant and does not vary. In actual
practical situations, there is an uncertainty with respect to the both demand as well as lead
time. The total forecasted demand may be more or less than actual demand and the lead
time may vary from estimated time. In order to minimize the effect of uncertainty due to
demand and the lead time, a firm maintains safety stock, reserve stocks or buffer stocks.
The safety stock is defined as the additional stock of material to be maintained in order
to meet the unanticipated increase in demand arising out of uncontrollable factors.
In simple it is tells about which is used to protect against uncertainties.
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Because it is difficult to predict the exact amount of safety stock to be maintained, by
using statistical methods and simulation, it is possible to determine the level of safety
stock to be maintained.
DETERMINATION OF SAFETY STOCKIf the level of safety stock is maintained is high, it locks up the capital and there is a
possibility of risk of obsolescence. On the other hand, if it is low, there is a risk of stock
out because of which there may be stoppage of production. When the variation in lead
time is predominant, the safety stock can be computed as:
Safety Stock = (Maximum Lead time- Normal Lead time) * Demand
SAFETY STOCK
The service level of inventory thus depends upon the level safety stocks. Large the
safety stocks, there is a lesser risk of stock out and, hence, higher service level.
Sometimes higher service levels are not desirable as they result in increase in costs,
thus, fixing up a safety stock level is critical. Using past date regarding the demand
and lead time data, reliability of suppliers and service level desired by management,
safety stock can be determined with accuracy.
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ABC ANALYSIS:
MEANING
The inventory of an organization generally consists of thousands of items with varying
prices, usage rate and lead time. It is neither desirable nor possible to pay equal attention
of all items.
ABC analysis is a basic analytical tool which enables management to concentrate its
efforts where results will be greater. The concept applied to inventory is called as ABC
analysis.
Statistics reveal that just a few items account for bulk of the annual consumption of the
materials. These few items are called A class items which hold the key to business. The
other items known as B & C which are numerous in number but their contribution is less
significant. ABC analysis thus tends to segregate the items into three categories A, B & C
on the basis of their values. The categorization is made to pay right attention and control
demanded by items.
FEATURES OF ABC ANALYSIS
A Class (High Value) B Class (Moderate Value) C Class (Low Value)1. Tight control on
stock levels
2. Low safety stock
3. Ordered frequently
4. Individual posting in
stores
5. Weekly control
reports
6. Continuous effort to
reduce lead time
Moderate control
Medium
Less frequently
Individual
Monthly control
Moderate efforts
Less control
Large
Bulk ordering
Collective posting
Quarterly control
Minimum efforts
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ADVANTAGES
This approach helps the manager to exercise selective control & focus his
attention only on a few items.
By exercising strict control on A class items, the materials manager is able to
show the results within a short period of time.
It results in reducer clerical costs, saves time and effort and results in better
planning and control and increased inventory turnover.
ABC analysis, thus, tries to focus and direct the effort based on the merit of the
items and, thus, becomes an effective management control tool.
FSN ANALYSIS:
All the items in the inventory are not required at the same frequency. Some are required
regularly, some occasionally and some very rarely. FSN analysis classifies items
into fast moving, slow moving, and non moving items
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Vendor Managed Inventory (VMI) process:
The basic Vendor Managed Inventory (VMI) process can be described in terms of the
following two steps: data communications and calculations, monitoring and reporting.
(A) Data Communications and Calculations
The VMI process starts with the customer sending a Product Activity Report. This report
contains demand information such as sales and transfers, along with inventory position
information such as on-hand, on-order and in-transit for the items that changed since the
last report.
The VMI software analyzes the data and creates recommended replenishment orders .
The recommendations are based on algorithms which use factors such as forecasts,
frequency of sale, and dollar velocity of sales. Ideally, these processes include:
o Periodic (e.g. weekly) review and calculation of order points and order
quantities based on movement data and special information such as
promotions, seasonality, etc.
o Frequent (e.g. daily) comparison of on-hand inventory to order point and
generation of recommended replenishment orders
The supplier's planner reviews the recommended orders and any exception conditions
before approving appropriate orders. The VMI system then sends:
o A Purchase Order to the supplier
o A Purchase Order Acknowledgment to the customer
(B)Monitoring and Reporting
When trading partners begin VMI, they start by agreeing upon objectives for:
o Inventory turns
o Fill rates (in-stock percentages)
o Transaction costs
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The system monitors actual activity with measurements against those objectives. The
system must report the same information to both the supplier and the customer so that the
process is highly transparent. Information should always be available to both parties on-
demand. Ideally, the VMI system should also provide exception alerts to both parties
when measurements get outside an acceptable range or when a problem with the data
appears.
VMI Processes in EDI based system
In EDI based system, a series of steps are required to complete the VMI process. Each
Step in this process is extremely important. Skipping or not completing any steps will
have a major impact on the success of your VMI program.
Step1- Senior Sponsorship:
Since the business paradigm is changing, senior management must make a firm
commitment to this new process. VMI must have senior management
sponsorship. It should be identified as a strategic objective and then
communicated throughout the organization. Senior management must commit to
the: costs involved, manpower needed for setup/maintenance and also the concept
of having someone else manage their inventory.
Step2-Employee Acceptance:
Get all employees to buy into the concept, especially the person currently
responsible for maintaining the inventory levels. Without their acceptance, your
program will never work. They must understand that VMI will not push them out
of a job. It will free up some of their time to allow them to be more productive in
other areas. Employee should be given a complete overview of what VMI willmean to the company and the reasons why its being done.
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Step3-Synchronize Files:
Synchronize the Distributors Product Files with the Manufacturers. This step
alone is one of the greatest benefits you will receive from VMI. Synchronizing
means that you must match the manufacturers product data with the distributors
product data. Are there old, obsolete items on the file? Are the correct product
numbers being used? Have new product numbers been properly communicated to
the distributor? Any time there is a change to the product catalog, the
manufacturer must share the data with their VMI partners. Your initial data
synchronization is extremely important as well as the ongoing synchronization
that will be needed.
Step4- EDI Testing:
Extensive testing of all EDI sets to be used. The manufacturer and distributor
must work very closely together to validate that the data is being properly
sent/received. For example: Does the Quantity on Hand
that is being received by the manufacturer match the Quantity on Hand in
Distributors stock? Is Quantity Sold being properly sent? You should check a
variety of items in different categories (A,B,C). EDI testing many take many tries
and adjustments before it is finally correct.
Step5- Acceptance & Measurements:
The Distributor must understand and agree with the Stocking Plan the
Manufacturer is creating. Even though the exact method may be a proprietary
method, the distributor should still have an understanding of how the plan is
calculated. This will help avoid the future question "Why did they send us this
product if we don't need it?"Additionally, predetermined Inventory Turns, Fill Rates and Service Levels
should be targeted. The Distributor should monitor their current performance for
comparison to later results. Both parties must agree upon the frequency of
replenishment (daily? once/twice per week?). The Distributor should have at least
one years worth of measurements prior to VMI for comparison to later results.
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Step6- POS History:
The Distributor sends the Manufacturer his POS (Point of Sale) History file,
usually 1-2 years (Disk or Email). This will allow the manufacturer to base the
inventory plan on direct sale data rather than data from the distributors past
ordering history. The format of the file must be compatible to the needs of the
manufacturer. Then the Distributor sends an EDI #852 All Item Refresh. This tells
the status and stock level of every item they have. MAKE SURE YOU VERIFY
BOTH SETS OF DATA!!! This is your last and most important validation point.
Note: The standard #852 only sends those products that had a change in position
since the last transmission (if no activity took place for that item, then the item
isn't sent). An #852 All Item Refresh sends every item.
Step7-
Distributor makes a sale and enters that transaction into their computer.
Step8-
On a daily/weekly basis the Distributor sends an #852 Product Activity. This
reports a change in position on any item since the last #852.
Step9-
The Manufacturer receives the #852 and updates the Distributors Stock Plan
.Once antemor Items have hit their Reorder Point (ROP), the Manufacturer
creates an Order.
Step10-
The Manufacturer sends out a #855 Purchase Order Acknowledgment to the
Distributor. This lets the distributor update their system with the newly created
PO. During the beginning of stages of your VMI partnership, it is important to
have the Distributor review the #855 and point out any problems.
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Step11-
The Manufacturer picks and ships the order and transmits a #857 Advance Ship
Notice. This tells the distributor exactly what is being sent and when its shipping.
Step12-
When the shipment is received, the Distributor transmits a #861 Receipt Advice.
This tells the manufacturer exactly what was received. The manufacturer can then
match this to his Purchase Order to determine any potential problems (mis-
shipped etc)
Step13- (optional)-
The Invoice is sent out via an #810. Payment by a #820...
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Vendor Managed Inventory (VMI): Benefits
VMI can have a number of benefits, including lowered investment in the supply chain
(due to better forecasting), JIT delivery and less overstocking) and greater inventory
turnover. Its primary benefit, however, is improved customer service due to fewer
stockouts and more optimal product mixes. Manufacturers and retailers also stand to
benefit from VMI, as it allows them to schedule production and transportation more
efficiently (including ordering raw materials), to observe end-user consumption and
general market trends more closely, and to develop closer ties with their customers.
In summary, Vendor Managed Inventory (VMI) has consistently provided significant and
numerous benefits to the Manufacturer, Retailer, Distributor, supplier and customer.
Manufacturers Benefits
Visibility to the Distributors Point of Sale data makes forecasting for the
manufacturer easier.
Promotions can be more easily incorporated into the inventory plan.
A reduction in Distributor returns due to improved ordering.
Visibility to Stock Levels helps to identify priorities - replenishing for stock or a
stockout. Before Vendor Managed Inventory, a manufacturer has no visibility tothe quantity and the products that are ordered. With VMI, the manufacturer can
see the potential need for an item before the item is ordered.
Retailer Benefits
Reduced inventory: This is the most obvious benefit of VMI. Using the VMI process, the
retailer is able to control the lead-time component of order point better than a customer
with thousands of suppliers they have to deal with. Additionally, the retailer takes on agreater responsibility to have the product available when needed, thereby lowering the
need for safety stock. Also, the retailer reviews the information on a more frequent basis,
lowering the safety stock component. These factors contribute to significantly lower
inventories.
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Reduced stock-outs: The retailer keeps track of inventory movement and takes over
responsibility of product availability resulting in a reduction of stock outs, there-by
increasing end-customer satisfaction.
Reduced forecasting and purchasing activities: As the retailer does the forecasting and
creating orders based on the demand information sent by the retailer, the retailer can
reduce the costs on forecasting and purchasing activities.
Increase in sales: Due to less stock out situations, customers will find the right product at
right time. Customers will come to the store again and again, there-by reflecting an
increase in sales.
Distributors benefits:
The goal is to have an improvement in Fill Rates from the manufacturer and to the
end customer. Also, a decrease in stockouts and a decrease in overall inventory
levels.
Planning and ordering cost will decrease due to the responsibility being shifted to
the Manufacturer.
The overall service level is improved by having the right product at the right time.
The manufacturer is more focused than ever in providing great service to the
distributor and the end customer.
Suppliers Benefits:
For the supplier, VMI results in increased profitability due to:
Increased sales Reduced operating costs
Stronger customer relationships
Improved visibility results in better forecasting: Without the VMI process,
suppliers do not exactly know how their customers are going to place orders. To
satisfy the demand, suppliers usually have to maintain large amounts of safety
stocks. With the VMI process, the retailer sends the POS data directly to the
vendor, which improves the visibility and results in better forecasting.
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Reduces PO errors and potential returns: As the supplier forecasts and creates the
orders, mistakes, which could otherwise lead to a return, will come down.
Improvement in SLA: Vendor can see the potential need for the item before it is
actually ordered and right product is supplied to retailer at right time improving
service level agreements between retailer and supplier.
Encourages supply chain cooperation: Partnerships and collaborations are formed
that smooth the supply chain pipeline.
As long as the supplier carries out its task of maintaining predetermined inventory
and avoiding stockouts, it will be able to lock in a VMI-supported customer for
the long term with or without a contract. This will produce a steady and
predictable flow of income for the supplier and reduce the risk that the customer
will switch suppliers (Switching would be too costly for the customer).
A VMI arrangement will allow the supplier to schedule its operations more
productively because it is now monitoring its customers inventory on a regular
basis. Furthermore, reductions in inventory will be achieved once the supplier
develops a better understanding of how the customer uses its goods over the
course of a year.
Customers Benefits
For the customer, VMI results in increased profitability due to:
o Reduced inventory/increased turns
o Reduced administrative costs
o Fewer stock-outs or shortages
o Increased sales (for distributors and retailers)
When the supplier can see that its customer is about to exhaust its inventory, the
supplier can better prepare to replenish the customer because the supplier can then
better schedule its own production/distribution. Customers will reduce/eliminate
stockouts because they will not have to reorder goods at the last minute without
knowing whether the supplier has the ability to restock without interrupting the
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customers operations. Therefore, part of VMIs goal is to reduce uncertainty that
arises when the supplier is blind to the customers inventory status.
Typical Benefits to Manufacturer/ Supplier Typical Benefits to Distributor /Retailer
Lower inventory investment (raw and
finished)
Better scheduling and planning
Better market information
Closer customer ties and preferred status
Fewer stock-outs with higher turnover
Better market information
More optimal product mixes
Less inventory in channel (transfer costs)
Lower administrative replenishment costs
DUAL BENEFITS TO SUPPLIER AND CUSTOMER:
Data entry errors are greatly reduced due to computer to computer
communications. The speed of the processing is also improved.
Both parties are interested in giving better service levels to the end customer.
Having the correct item in stock when the end customer needs it, benefits allparties involved.
A true partnership is formed between the Manufacturer and the Distributor. They
work closer together and strengthen their ties. This benefits of a stronger
partnership goes beyond VMI.
Stabilize the timing of Purchase Orders - PO's are now generated on a predefined
basis. Example: A once/twice Weekly purchase order cycle.
Vendor Collaboration: Other Benefits
Inefficiencies in the supply chain affect not only the retailer, but also the vendors that
supply the goods offered to consumers. Inaccurate or inaccessible data in the inventory
management system can lead to retailers ordering unnecessary products because they
don't know they have supply on hand or hinder a retailer from placing necessary orders
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when supplies are low. Leading retailers use business intelligence to collaborate with
their vendors to:
Reduce or eliminate the "bullwhip effect." The bullwhip effect is the distortion of
product demand signals generated by order batching, shortage planning and
reactions to price variations across the supply chain. Although retailers may open
access for vendors to monitor aggregated sales data on their products, vendors
typically lack visibility into fine-grained transaction-level demand at retail stores.
Providing vendors with insight into true demand reduces the necessary volume of
safety stock kept on hand.
Leverage economies of scale. Demand for product lines with constant variability
such as fashion items is inherently difficult to predict. By combining business
intelligence-based sales analysis with postponement (also known as delayeddifferentiation), the vendor can stock undifferentiated product in bulk and delay
specific labor to convert it into its final form until a dependable demand forecast
is available.
Make vendors responsible for managing inventory. Web-based BI applications
can allow selected external suppliers to access timely detailed demand
information for their products across all locations and channels, allowing vendors
to more accurately predict customer demand. Additionally, by providing
aggregated information pertaining to their competitors' performance, retailers can
foster competition between suppliers to proactively maintain shelf stock, virtually
eliminating costly out-of-stock and overstock situations.
BI-based vendor managed inventory systems (VMI) co-opt vendors into taking
responsibility for properly managing inventory levels at distribution centers and stores,
resulting in exponential value for both the retailer and vendors alike.
Supply Chain Efficiency
Business intelligence gives retailers the ability to gain access to enterprise-wide
information on the company's supply chain operations. This insight can help to improve
the accuracy of demand forecasts and increase the efficiency of the supply chain,
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reducing lead times, carrying costs, and operating costs across the enterprise. Retailers
can use BI to gain visibility within their supply chain by:
Scrutinizing detailed waypoint logs. Long order picking times may indicate
equipment maintenance problems or suboptimal routing. High error rates in
orders picked by a given operator can be symptomatic of insufficient training,
excessive distraction or defective identification mechanisms. Lessening the
amount of time spent locating specific items to fill orders can help to reduce
operating costs, increase productivity and optimize service levels.
Analyzing vendor and distribution center lead time and lead time variability.
Retailers can reduce the need for safety stock if they can identify bottlenecks in
their delivery system and reduce lead times for movement to the sales floor.
Measuring forecast accuracy. Retailers that more quickly identify products withforecasts that vary significantly from actual demand can reduce the possibility
that that product will experience an over-stock or out-of-stock position.
The aggregated effect of using business intelligence for supply chain optimization is a
reduced need for safety stock to avoid service interruptions, increased asset liquidity, and
easier access to available working capital.
Markdown Optimization
Business intelligence can be instrumental in both quickly identifying products that should
be discontinued or marked down and determining the most profitable way to sell through
poor performing merchandise. Combining item level plans with sales data allows retailers
to quickly identify items to be promoted, marked down, or sent to outlet stores. The
ability to react promptly to issues at item level enables retailers to avoid build-ups of non-
productive merchandise.
In addition, business intelligence can be used to determine the most efficient ways to sell-
through slow selling inventory. Retailers can use BI to identify the levels of discounts
that have worked in the past to liquidate similar merchandise. Alternatively, BI can also
be used to identify which locations have sold the product better or which sell markdown
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merchandise better so that broken assortments can be consolidated to the locations that
have the best opportunity to sell the merchandise more quickly or at a higher price.
Retailers who take advantage of business intelligence to improve markdown optimization
are able to spend less time determining merchandise to mark down and instead are
focusing their efforts and investments on more productive inventory.
The Benefits of Business Intelligence for Inventory Improvement
World-class business intelligence environments allow retailers to increase their visibility
into inventory management without hampering daily operations. By extracting
information from disparate source systems into a centralized repository such as an
enterprise data warehouse, retailers are concurrently reporting on metrics related to their
supply chain, sales, production and internal operations to make better, fact-based business
decisions. By utilizing a data warehouse that supports trending on both historical and
future operational metrics such as weeks of supply, sell-through, inventory turnover,
gross margin return on inventory and shrinkage, retailers can improve data quality and
accuracy, manage inventory levels to avoid lost sales or oversupply, provide external
vendors with increased visibility into product performance, and allow managers and
executives to make more timely decisions using a common set of data trusted across the
entire user community
Factors responsible for a successful VMI System
Although the basic concept of VMI is straightforward, successful deployment is not
necessarily easy. There are several keys to success:
Recognize that VMI is not for everyone
First, companies should recognize that VMI is not for everyone:
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o Suppliers and customers should only consider VMI for trading partners
that are important to them (e.g. reasonably high volume or growth
potential)
o Suppliers and customers can only do VMI with trading partners that have
reasonably solid basic operational capabilities (i.e. consistent warehouse
procedures and the ability to provide good data)
Understand That VMI is Collaborative
Second, VMI is different from a typical in-house information system or business process
improvement effort in that neither the supplier nor the customer can do it alone - they
must work together to make it happen.
o Both companies must have mutual trust, a fundamentally good working
relationship, and an environment that fosters collaboration.
Don't Underestimate the Importance of the VMI Operations Platform
Third, VMI requires a technology and operations platform that is:
o Designed around a deep understanding of inventory and supply chain
management
o More than just performing the right calculations.
o Designed with a solid understanding of issues like varying demand
patterns, different supply chain structures (e.g. hub & spoke vs. direct
store delivery), multi-location shipping & delivery, and many others.
o Built to facilitate consistent, effective communication between the
customer and supplier
o Provides common information to both parties so the process is transparent
(e.g. inventory turns and in-stock percentages)
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o Provides valid information so people will trust it (e.g. built-in processes to
ensure data quality)
o Exception-oriented so people can focus their efforts where action is
needed instead of wading through data (e.g.: highlight unusual demand,
suggested transfers, and items not sold)
o Managed to ensure reliable operation day-in and day-out.
o A data center with high availability using techniques such as redundancy,
fail-over, 24x7 management
o Communications management that monitors for expected transmissions,
automates re-tries, and alerts when down
o Skilled people ready to quickly resolve problems (e.g. transmission, data
format)
Leverage VMI Experience
Finally, trading partners committed to the success of VMI should look for a source of
experienced guidance and support, along with well-conceived implementation tools and
processes.
o People who have implemented VMI and use it regularly
o Project plans and tools that take the guesswork out of start-up
o Organizations committed to continually improving the process
o Professionals ready to provide support when things change, and help
whenever it is needed
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Six Steps to a Successful VMI System
now the question arises: how can one implement a successful VMI system? There are the
following suggestions:
1 COMMUNICATE expectations of all parties. Customers and suppliers must make
the effort to sit down and discuss the goals and objectives of implementing VMI. The
importance of this step cannot be overstated. Both parties hardware and software
requirements must be identified, and an understanding must be reached in terms of how
both companies systems will communicate. Then a plan for implementation must be
mapped, specifically identifying each partys financial and other responsibilities.
2 Customer must commit to sharing PRECISE information. Suppliers must have
visibility into the customers internal sales and inventory information. Without accurate
data, ability to quickly meet demand will be impaired.
3 Suppliers must ensure RELIABLE transmission, receipt, and use of information. To
facilitate step 2, the supplier must be able to guarantee that the customers trusted
information will be communicated, received, and utilized securely and thoroughly to
meet the designated needs. Time should be spent during the planning phase discussing
information precision and reliability.
4 Sufficiently TEST systems before going live. As with any new system, testing will
uncover any bugs or inefficiencies and can help to avoid future headaches.
5 Expect implementation to be a PROCESS not a project. Remember that there is no
on/off switch. Adjustments will have to be made as demand levels fluctuate, and no
system will be perfect 100% of the time.
6 Plan to spend sufficient TIME AND MONEY to make it work. Most successful VMIsystems weve read about took 2-2.5 years to put into operation, and cost hundreds of
thousands of dollars for IT and training. Spending (or finding) the time to create a
comprehensive system can be a challenge.
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Here are two compelling success stories about companies who have recently gone public
with their VMI successes.
1. ST Microelectronics N.V. and Hewlett Packard began using their well-planned
VMI system in the summer of 2001. Gilles Sanchez, STs supply chain concept
owner, said his company has cut product lead time in half, reduced buffer
inventory from five to two weeks, and eliminated 80% of manual transactions"
(3). Although the returns are terrific, it must be noted that HP and ST worked
together for two years to make the system succeed. They say their secret to
success was their ability to connect their incumbent IT infrastructures and build
off of the existing platform.
2. Sun Microsystems has also figured out how to make VMI successful, but also
spent two years in the planning phase. Half of its $350 million fiscal year
inventory reduction is a direct result of the new VMI system (the other half, they
say, is due to last years general drop in demand). Sun created a pull system with
its suppliers. When a customer places an order, a signal is sent to suppliers who
are expected to deliver replacement raw materials within four hours, or finished
goods within 24 hours. Sun provides suppliers weekly materials, six-quarterforecasts, and month-out views of actual PO data. Their key to success was
spending enough time planning with suppliers before moving to the
implementation phase.
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Controls:
The following are a list of potential controls that could be implemented to monitor
VMI systems:
1. At least at first and then periodically thereafter, the retailer should monitor
inventory levels to determine whether the vendor is sending enough
inventory to prevent stock outs but not too much inventory that is slow to
sell.
2. Analyze inventory costs. If VMI is working, then overall inventory costs
should decline.
3. Intrusion detection systems to determine if the vendor has compromised
the security of the retailers system.4. Unauthorized access attempts to non-VMI related areas of the retailers
system.
VMI'S POTENTIAL PROBLEMS
Successful VMI programs depend on several critical factors, some of which are not
immediately obvious. This has led to much confusion in the distribution and retail
industries, as suppliers and buyers have sought to implement VMI as the newestimprovement to their existing systems. VMI, while a logical outgrowth of EDI, Efficient
Consumer Response (ECR), Category Management (CM) and other programs, is
qualitatively different.
VMI depends upon the availability of solid and comprehensive consumer data (POS).
Without such "live" information, the benefits of VMI begin to become elusive. The
mfg/vend must understand the true nature of POS data and how the dist/ret is using the
stock that is ordered. While previously it was sufficient to know that X number of units
were ordered, under VMI, the supplier needs to know whether those units were being
inventoried (and for how long), whether they were special orders, if they were ordered
just to create full truck loads, the number of end users the units were going to, and so on.
Moreover, efficient inventory management and production scheduling requires close
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communication regarding promotions, seasonal variation, and new product introductions
and selling incentives that may impact the ability to forecast accurately. Thus, exceptions
communication must also be incorporated beyond the automated nature of data transfer
under VMI. Close supply chain communication is typically best addressed through
routine and ad-hoc conference calls, video conferencing, and email systems.
Problems with VMI
What makes VMI different from EDI and its other incarnations is that it passes
control of the supply chain as far up the supply chain as possible to support production
pooling and inventory minimization. Thus, VMI should only be implemented in cases
where the mfg/vend can forecast demand more accurately than the dist/ret. As pointed
out earlier, however, the competency to forecast and determine order levels is a learnedcapability. This indicates that supply chain partners should decide strategically who
should hold such responsibility, and then let that entity develop the competency. Making
inaccurate decisions in this area can lead to more problems. As well, change must
become quickly adopted as "tweaking" will become the norm not the exception.
Clearly, there are industries where the vagaries of consumer demand, local conditions
or market size dictate that the dist/ret should retain control of inventory management.
This was the case with K-Mart, which after reducing the number of vendors it worked
with and implementing VMI, discovered that its own buyers could do a better job of
forecasting consumer demand in certain circumstances. Some market conditions do not
make VMI the best solution and a tailored/hybrid approaches need to be explored.
Specifically, the "silver bullet" approach will lead to problems if organizations accept
VMI as an end-all solution.
One question that could not be resolved in reviewing the activities of many VMI
programs is for what type of products VMI will and will not work. This is a complex
question where high volume, high turn items, like disposable diapers, are popular
candidates because they are low hanging fruit, while "best of breed" organizations have
had success in other product types. Wal-Mart and P&G have had a VMI program
together for over ten years to manage the inventory and production of disposable diapers,
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with great success: turns doubled, Wal-Marts' operating costs fell, and P&G's market
share grew (because Wal-Mart gave it preferred shelf space). However, the opinion that
non-volatile, low-turn products would also benefit was also expressed, and none of the
reported failures revolved around the type of product included in the programs. This may
indicate an appropriate starting point to chose mfg/vends that have capabilities but also
that produce such products.
Additionally, the answer depends on a number of variables that need to be
considered, including:
What percent of their total volume do the VMI vendors sell through the dist/ret?
What capabilities do the vendors have in the area of forecasting or retail inventory
management?
How flexible will the system be in the event of required changes and
modifications?
Will there be minimum volume or exclusivity requirements? What product items
are being considered?
Another, more fundamental, problem with making vendors responsible for retailers'
inventories is the fact that mfg/vends traditionally want to push product (i.e., maximize
inventory), while retailers want to minimize inventory (i.e., optimize sales). Overcomingthis dichotomy requires trust that both parties are seeking long term profitability. The
dist/ret should also assure itself that the interests of the mfg/vend salespeople are aligned
with its own. Elements that need to be considered include:
How will the mfg/vends' salespeople be compensated?
How will special pricing and promotions be handled?
How will the benefits of VMI be split?
What dist/ret sales and volume data should be kept confidential?
What are the mfg/vends' other channels?
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As distribution systems become more sophisticated, the mechanical aspects of
providing outstanding service--whether its next day delivery or access to a broad network
of manufacturers--will become more accessible to all firms. Service, therefore, from a
distribution aspect, may not translate into a sustainable competitive advantage, however
knowing which products, in what quantities, and where to store them, may be.
OUTLOOK AND FUTURE OF VMI
Logistics experts have recently published the results of the annual logistics survey
that shows the acceleration of trends towards cycle time compression, reduced inventory,
increased inventory velocity and greater use of EDI. According to these researchers,
more industries are paying closer attention to supply chain management. The survey
results show that information technology and supply-chain management will most affectthe future growth and development of logistics. The results of the survey forecast an
increase in inventory turns, which survey respondents said will rise from 30% to 40% by
the year 2000. They also show that pooling of shipments is re-emerging as a Logistics
strategy (14.2% - '94, 17.8% - '96 and 27.5% -2000). This implies that companies are
becoming increasingly competitive in determining what inventory to carry while offering
quicker and more customized service. According to LaLonde, this can be attributed
directly to the application of VMI, which will increase from 4% of inbound shipments'. in
'94 to 19% by the year 2000.
According to another survey released by the International Mass Retail Association
(IMRA), VMI programs will grow substantially in the near future.1 Over 60% of hard
goods and almost 40% of soft goods are now under replenishment programs managed by
retailers. The survey projects very little growth beyond these levels. On the other hand,
respondents mentioned that VMI programs are intended to grow within their
organizations from insignificant levels today to 10% of volume in the next three years for
hard goods and about 7% for soft goods.
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CONCLUSIONS
From above we conclude that:
some companies continue to manufacture to stock without leveraging customer-
specific data effectively for production planning
In order to provide priority service to VMI partners, some vendors reserve
inventory resulting in shortages to other customers
Insufficient level of system integration results in incomplete visibility
High expectations from retailers
Resistance from sales forces due to concerns of losing control, effecting sales
based incentive programs
Lack of trust and skepticism from employees
Lower cost retailers are able to essentially outsource their inventory
management to their vendors.
Potentially reduced lost sales provided that the vendors are able to meet
product demand.
More accurate forecasts since vendors have more data from the retailers, they
are able to more accurately forecast and meet demand for their products.
Cost the retailers and vendors must expend the resources necessary to acquire
the technology and incur the costs of changing the organization to a VMI
arrangement.
Security The vendors have significant access to retailer data. The retailer puts
one of their most valuable assets, their sales data, in the hands of their vendors.
Such access opens the door to a myriad of data and system security issues such as
data alteration and deletion, unauthorized access to non-sales related data,
inadvertent loss of data or even corporate espionage.
Over supply the vendor could ship more inventory than the retailer needs tomeet demand.
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SUGESSTIONS
Effective implementation of VMI depends on smoothly overcoming the limitations and
addressing the concerns of various stake holders. Some of the concerns can be addressed
as explained below:
Redefine incentive programs based on partnership building instead
of sales volume
Build strong partnerships with management commitment to
effective communication, active sharing of information,
commitments to problem solving and continued support
Conduct simulations and pilots before actual implementation
Organize training sessions before launching VMI program
Set reasonable targets for benefits of VMI
Establish agreements on service levels and process to handle
exceptions
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Appendix A
VENDOR MANAGED INVENTORY AGREEMENT
(A draft of agreement signed for VMI between two parties)
This Agreement is entered into on ________________ 2011 between (Name of the
company with address) and, a _____________________________
Corporation with offices at ______________________________________ (Buyer).
1. Scope. Buyers orders and purchases from (Name of the company) are governed
by (Name of the company) Terms and Conditions, which appear on (Name of the
company) quotations, packing slips, invoices and at website: _________________,
(Name of the company)Terms and Conditions are incorporated into and form a part of
this Agreement as if set forth at length herein. This Agreement contains the provisions
governing Buyers requests for a consignment program. As used in this Agreement, the
terms Vendor Managed Inventory or VMI will mean the inventory of consigned
Products.
2. Vendor Managed Inventory. Buyer will provide (Name of the company) with
monthly rolling forecasts. If Buyers forecasts are accepted by (Name of the company), ______will make reasonable commercial efforts to schedule orders and deliver to
Buyers Facility a quantity of Products sufficient to meet Buyers forecast requirements.
Buyer, without charge, will provide within Buyers Facility a secure and segregated
location which meets applicable environmental and electro-static discharge specifications
for storing and handling the Products, and trained personnel to handle the Products. If at
the end of any sixty (60) day forecast period the quantity of Standard Products forecast to
be required for such period is in excess of the quantity purchased for such period, then
(Name of the company) will have the right to require return of such excess quantity from
VMI. If at the end of any sixty (60) day forecast period the quantity of Non-Standard
Products forecast to be required for such period is in excess of the quantity purchased for
such period, then Buyer will accept immediate delivery of such excess quantity from
VMI and Buyer will be liable to purchase and pay for same. Standard Products which are
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returnable will be returned in unused, factory-shipped condition, with seals intact, within
the expiration date, if any, and in original manufacturers shipping cartons complete with
all packing materials.
3. Title and Risk of Loss or Damage. Ownership and title to Products in VMI will
remain with (Name of the company) . Notwithstanding the foregoing, Buyer will be
responsible upon delivery of the Products to Buyers Facility for all risk of loss or
damage to the Products from any cause, including shrinkage in quantity, theft, pilferage,
deterioration, casualty loss, or determination that the Products are not in resaleable
condition due to use or handling or conditions under which the Products were stored.
Title to the Products shall pass to Buyer upon removal of the Products from the VMI.
Buyer will not cause or permit any lien, levy, attachment or judicial process to be
imposed on the VMI and Buyer will give Avnet immediate notice if any is imposed.Buyer will be deemed to have purchased the Products and the Products will become non-
returnable upon the earlier of: (i) upon the breaking or removal of the seal of the bag, rail
or container in which the Products are packaged; or (ii) the transfer, disposal or use of
the Products by Buyer; or (iii) loss, quantity discrepancies, or damage to the Products
from any cause determined by an inspection of VMI performed by either party. Buyer
will be deemed to have converted the Products in the event of: (i) the imposition of any
lien, levy, attachment or judicial process on the VMI; or (ii) Buyers failure to return on
request all or any part of the VMI in accordance with this Agreement. Buyer agrees to
execute on request, and Buyer hereby authorizes Avnet to execute on Buyer's behalf, a
UCC-1 Financing Statement for informational purposes only and not to grant or create
any security interest in the Products. Buyer will purchase the Products for its own use and
will not otherwise transfer or dispose of the Products without the prior written consent of
Avnet. Buyer will not remove the Products from Buyers Facility without Avnet's written
consent. (Name of the company) reserves the right at any time to require Buyers
immediate return of any or all Products in VMI.
4. Purchases by Buyer. Buyer, on a weekly basis, will provide (Name of the
company) with a detailed report showing for the preceding week the inventory balance of
Products in VMI and purchases of Products. (Name of the company)will invoice Buyer
for all purchases during the period covered by such invoice.
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5. Insurance. Buyer will obtain and keep in force during the term of this
Agreement: (i) a policy of fire and extended coverage insurance with an all risk
endorsement insuring against loss or damage to the Products in the amount of the full
replacement cost thereof; (ii) workers' compensation insurance; (iii) commercial general
liability insurance covering bodily injury, death and property damage with a combined
single limit of one million dollars ($1,000,000); and (iv) employee fidelity insurance.
Such insurance will: (i) name (Name of the company) as an additional insured; (ii) be
written on an occurrence basis as a primary policy by insurance companies reasonably
acceptable to (Name of the company); and (iii) will provide for thirty (30) days notice to
(Name of the company) in the event of cancellation or material change. Certificates
issued by the insurer evidencing such policies will be delivered to (Name of the
company) prior to the delivery of any Products under this Agreement and thereafter at
least ten (10) days prior to the expiration or renewal of such policies. The amount and
coverage of such insurance will not limit Buyers liability nor relieve Buyer of any
obligation under this Agreement.
6. Inspection. (Name of the company) will have the right to enter Buyer's Facility to
inspect the VMI or to perform an inventory of the VMI at any time during Buyer's
regular business hours.
7. Term and Termination. This Agreement is effective on the date set forth above
and will continue until terminated. Either party may terminate this Agreement at any time
without cause by giving thirty (30) days prior written notice to the other party. Either
party may terminate this Agreement immediately for cause by giving written notice to the
other party in the event the other party: i) becomes insolvent or unable to meet its
obligations as they become due or files or has filed against it a petition under the
bankruptcy laws; or (ii) ceases to function as a going concern or to conduct its operations
in the normal course of business; or (iii) assigns or transfers, either voluntarily or byoperation of law, any rights or obligations under this Agreement without consent of the
party seeking to terminate; or (iv) effects any material change in its management or
ownership; or (v) fails to perform any obligation under this Agreement within ten (10)
days after written notice thereof. This Agreement may also be terminated by Avnet for
cause immediately by giving written notice to Buyer in the event Buyer: (i) removes the
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Products from Buyer's Facility for any purpose other than for its own use; or (ii) fails to
provide Avnet with evidence of insurance as required pursuant to this Agreement or
cancels or allows to lapse such policies of insurance.
8. Effect of Termination. Upon termination of this Agreement, Buyer will return
any Standard Products in VMI or delivered or in transit to Buyers Facility as VMI or, if
requested by (Name of the company) , Buyer will assemble and make all such Standard
Products available for return at a location designated by (Name of the company) . In the
event that Buyer fails to do so, such Standard Products will be deemed converted and
(Name of the company) will have all rights and remedies of an owner to recover
possession of its property under applicable Federal and state law, all of which rights and
remedies will be cumulative and may be exercised successively or concurrently. The
foregoing is without limitation or waiver of any other rights or remedies available to(Name of the company) . Buyer agrees to pay the reasonable attorney's fees and expenses
incurred by Avnet in exercising its rights or remedies hereunder. Notwithstanding
termination of this Agreement, Buyer will be liable to purchase and pay for all Non-
Standard Products ordered for VMI. All freight charges associated with any returns or
recovery of Standard Products will be paid by Buyer.
9. General.
(a) (Name of the company) and Buyer are independent contractors. Neither (Name
of the company) nor Buyer will be considered an agent of the other for any purpose and
nothing in this Agreement will be construed to allow either party to make any
representation or warranty on behalf of the other.
(b) The terms of this Agreement are proprietary and confidential. Neither party
will disclose the terms of this Agreement except as required to perform their obligations
hereunder.
(c) Any notices under this Agreement will be sent by certified or registered mail,
return receipt requested, or by recognized overnight courier, to the party to be notified at
its address set forth above. Notices to (Name of the company) will be sent to the
attention of: Director of Customer Contracts.
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(d) If there is any inconsistency between this Agreement and (Name of the
company)s Terms and Conditions, this Agreement will control.
10. Entire Agreement. This Agreement contains the entire understanding of the
parties and supersedes all prior agreements between the parties with respect to the subject
matter hereof. Changes to this Agreement must be in writing and signed by duly
authorized representatives of the parties. The parties represent and warrant the persons
signing below are expressly invested with the requisite authority to bind their respective
corporations in such matters.
This Agreement is duly executed as of the date first set forth above.
(Name of the company)
By: By:
Name: _____________ Name:
Title: _____________________ Title:________________________________
Date: Date:
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BIBLIOGRAPHY
WEBSITES
www.vmi india.in.com
www.wikipedia.com
www.tata cosultancy.com
REFERENCES
SD, VMI (Outlook and future ) Publications(7th Revised Edition),Pg-136-153
Banerjee -Challenges and VMI Models (2nd Revised Edition),Pg. 18.6-18.56
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