Submit to.

Sohail Majeed
Class.Supply Chain Management(Fri 6:30)
Submit from. Safdar Bin Zafar(2822)

VENDOR MANAGEMENT INVETORY

VMI is a process where the supplier generates orders for the customer based on demand
information sent by the customer. 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. During this process the supplier is guided by mutually
agreed to objectives for inventory levels, fill rates and transaction costs.

The goal of VMI is to align business objectives and streamline supply chain operations for both
suppliers and their customers. The business value is a direct result of increased information flow:

 Improved Inventory Turns

 Improved Service
 Increased Sales

Benefits The process laid out above is not significantly different from the standard practice today.
So, what.s the big deal? Why is this better than the customer ordering themselves? To understand
why, let.s look at each benefit advertised by the parties doing VMI.

Critical Element Leading manufacturers are striving to become more responsive to customer
demand across a wide range of products without the need for tremendous amounts of inventory.
Many companies are working to develop demand-driven supply networks where they have the ability
to quickly 'sense and respond' to actual demand. Some are even using this approach to 'shape'
demand based on continuous visibility of market activity.
VMI links a supplier directly to actual customer demand. In the transformation from a 'push'
approach to supply chain management to a demand-driven 'pull' approach, unfiltered demand
signals are a critical element. VMI provides those signals. With VMI, the right products are
continually pulled into the right places at the right time with continuous replenishment at the point
of consumer purchase or usage. This fundamental pull process combined with the market visibility it
provides makes VMI an indispensable element of any company's demand-driven supply chain
program.
Submit to.Sohail Majeed
Class.Supply Chain Management(Fri 6:30)
Submit from. Safdar Bin Zafar(2822)

Collaborative Planning, Forecasting and Replenishment (CPFR)

CPFR is a business practice that combines the intelligence of multiple trading partners in
the planning and fulfillment of customer demand. Links sales and marketing best practices
to supply chain planning and execution processes. Objective is to increase availability to the
customer while reducing inventory, transportation and logistics costs

CPFR Benefits

 Implicitly, CPFR strengthens an existing relationship and substantially accelerates

the growth of a new one.
 Buyer and seller work hand-in-hand from inception through fruition on business
plan, base, and promotional forecasts.
 Continual CPFR meetings strengthen this relationship.
 The close collaboration needed for CPFR implementation drives the planning for
an improved business plan between buyer and seller.
 CPFR enables a time-phased order forecast that provides additional information,
greater lead time for production planning, and improved forecast accuracy vs.
either stand-alone VMI/CRP or other industry tools.
 CPFR enables a time-phased order forecast that provides additional information,
greater lead time for production planning, and improved forecast accuracy vs.
either stand-alone VMI/CRP or other industry tools.
 With fewer out-of-stocks resulting from better planning information, higher store
service levels will prevail, offering greater consumer satisfaction.