Especially in times of rapid market changes, the cascading supply chain
"Sales -> Supply Chain -> Production -> Procurement -> Supplier -> Manufacturer"
is performing to only a limited extent, and due to flexibility limitations is leading to adaptations that results in expensive inventories and costly delivery bottlenecks.

Why is that? For a proactive control of your inventories you are missing substantial information like production lead-times, capacities, plant utilization, minimum order quantity, replenishment time, failure rate and the like. All of such information is available within the production programs of your suppliers or service providers. VMI means that instead of exhaustingly replicating and keeping that information up-to-date (which will never work perfectly anyhow), you hold your suppliers to account for managing the necessary production related inventories for you. Or in other words: you manage your customer orders and your supplier resp. your service provider manages the needed inventories.

With a good VMI concept, in which the supplier or service provider is directly involved in the planning- and inventory responsibility, inventories and inventory cost will be reduced, the Operating Working Captital will be improved and at the same time the reactivity for changing demands will be increased.

For that purpose adaptations of processes and methodologies for planning and within material management are necessary, and likewise commercial agreements with selected suppliers need to be made. The utilization of EDI or the extended usage of it provides a complementary, reliable system platform.

A VMI concept is optimal for companies with their own production sites and EDI transactions already in operational use with key suppliers.

Together with my partner MatEk Consulting we will elaborate a sound VMI concept and support implementation up to the routine operation. That also includes coordination and training of the internal and external functions involved in the process.

EDI: Electronic Data Interchange
WebEDI: EDI as Internet application