Vendor-Managed Inventory (VMI) 

Use

This scenario describes how vendors can offer their customers the service of planning replenishments for the vendor’s merchandise within the customer’s company. Vendors can only offer this service if they have access to current customer stock figures and sales data.

In R/3, you can implement vendor-managed inventory (VMI) from a vendor point of view and from a customer point of view. VMI would typically be used when the manufacturer of consumer products plans to replenish a retailer’s products.

You can use VMI functions independently of each other and also in different contexts.

Integration

The following R/3 components are used:

Component

Function

Vendor (in customer system)

Transferring Stock and Sales Data

Sales order (in vendor system)

Receipt of stock and sales data via EDI

Planning replenishments for customers

Purchasing (in customer system)

Creating purchase orders for an order acknowledgment received by EDI

Process flow

It is assumed that both the vendor and the customer have R/3.

  1. Transferring stock and sales data via EDI

    2. The customer uses the message category PROACT to transfer the current stock and sales data for a particular article to the vendor.

    See also: Transferring Stock and Sales Data to the Vendor.

  2. Receiving stock and sales data via EDI

    3. The sales data for the article is entered in an information structure in the information system in the vendor system. The stock data is entered in the replenishment master data of the article.

  3. Planning replenishments for customers

    4. Using the sales data, vendors can forecast future expected sales of the articles concerned at their customers’ sites.

    Vendors first of all plan article replenishments based on the current stock levels and any forecast values. The replenishment planning program calculates the requirement and generates a sales order as a follow-on document.

    Sales order data is transferred to the customer by EDI as an order acknowledgment . Message category ORDRSP is used for this.

    See also: Customer Replenishment.

  4. Creating a purchase orders for an order acknowledgment received by EDI

    5. The order acknowledgment from the vendor is converted in the customer’s system to a purchase order. If a purchase order cannot be generated due to incomplete data, for example, the system triggers a workflow.

    If follow-on messages (for example, purchase order change notifications or shipping notifications) about this procedure are to be sent to customers by the vendor at a later date, the vendor’s system must be notified of the order number. The vendor’s system can then enter the number in follow-on messages as an identifier, thereby notifying the customer’s system of the relevant purchase order.

    If the purchase order is to be sent automatically to the vendor’s system after purchase order generation, you must maintain the partner agreement for EDI message type ORDCHG, message code VMI.

  5. Entering the purchase order number in the sales order

The purchase order number from the customer’s system is entered as a reference in the relevant sales order.