Vendor managed inventory

With Vendor Managed Inventory (VMI), the supplier (or outsourcing partner) takes over the inventory management of his goods and merchandise at the customer (retailer or manufacturer). For this purpose, they receive continuous information, e.g. sales/consumption data or the forecast requirements of their customers. The aim of VMI is to achieve a higher level of service with shorter response times and lower inventories at the same time. Although the ERP system often plans in the context of summary inventory management, there are cases in which a corresponding functionality is provided by the WMS, for example, if

• WMS-specific material that is not managed in the ERP system (e.g. packaging materials) is to be staged by an automated replenishment by the service provider/supplier, or
• The supplier carries out material requirements planning without a higher-level ERP system (e.g. logistics service provider) and the WMS replaces this functionality.

From a WMS perspective, two versions of the VMI are possible:

• With active VMI, the WMS plans stocks at a downstream level, for example by organizing automated replenishment by generating a delivery order based on sales or consumption data.
• With passive VMI, the WMS enables direct access to the stock data in the warehouse by an upstream supplier, who can plan an inbound delivery if required.