Replenishment control according to the VMI principle

Efficient replenishment control mapped directly in SAP

A supplier-managed replenishment has many advantages, especially for its customer. The supplier not only assumes responsibility, but must also ensure the necessary transparency and efficiency. To meet this complex requirement, one cannot do without supporting IT solutions. This is how efficient Replenishment Control.

Replenishment management by the supplier

Vendor Managed Inventory (VMI) is a logistics concept for improving performance in the supply chain, in which the supplier has access to the customer's inventory and demand data. In the form of so-called consignment inventory, the supplier maintains a consignment warehouse at the customer's premises from which customer requirements are covered. The warehouse is usually located close to the customer or on the customer's premises.
The goods remain in the possession of the supplier until they are withdrawn and paid for by the customer. Responsibility for the supply of goods - i.e. inventory management and replenishment planning - is transferred to the supplier or also to an external service agent (ESA). VMI is particularly suitable for goods that have high consumption and/or high consumption value.

For the customer, VMI increases availability, preserves liquidity, saves storage costs and shortens delivery times. The supplier strengthens long-term customer loyalty with its customized delivery service.
The higher risk with VMI is borne by the supplier. This is because he is responsible for providing his customer with the desired material in the desired quantity at the desired time. If he does not do this satisfactorily, this can disrupt the relationship with the customer or even lead to termination of the contract. Poor planning can also result in excess inventory, which has financial disadvantages.

Prerequisites for efficient VMI delivery processes

The IT-side mapping of VMI processes is not trivial. The supplier always needs accurate information about:

Allowed minimum and maximum stocks

Permitted minimum and maximum range

Planned sales/demands/forecast

Stock of the customer (or the ESA)

Receipt messages from the customer

Withdrawal messages from the customer

For the VMI concept to work for both sides, the following prerequisites are important:

Automated data exchange

Transparency in the processes

Efficient replenishment control

Our process solutions

SPEEDI VMI

With SPEEDI VMI, suppliers stock the customer warehouse completely IT-supported and automated from SAP ERP or S/4HANA. The module calculates the optimal shipping quantity, schedules it automatically in SAP, and takes into account individual agreements regarding minimum or maximum stock and range as well as preview quantities and inventory data. SPEEDI VMI also takes into account the supplier's replenishment strategy.

SPEEDI ESA

SPEEDI ESA enables end-to-end ESA processing in SAP ERP or S/4HANA. The module maps all transaction types according to EDIFACT INVRPT: the shipping notification from the supplier to the ESA as well as, vice versa, goods receipt, inventory, damage, loss, or delivery notifications (daily collective delivery bill) from the ESA to the supplier. The necessary adaptations to additional requirements not covered by EDIFACT INVRPT can be made very easily via the configuration.

SPEEDI Third Party

With SPEEDI Third Party suppliers can carry out their drop shipment process in SAP ERP or S/4HANA in an IT-supported and automated manner: from the incorporation of the drop shipment into the SD scheduling agreement to the forwarding of the delivery schedules to the drop shipment supplier to the goods issue posting. This eliminates the need for time-consuming manual steps.

Wolfgang Salinger

Director Business Unit SAP & Digital Supply Chain

T: +49 89 895089 426
M: wolfgang.salinger@wsw.de