Vendor Managed Inventory (VMI)

1
Vendor Managed Inventory (VMI)
Presenter Arul Murugan, CPIM
2
Agenda

• Overview about VMI
• Pre-requisites for Oracle VMI
• Oracle Architecture for VMI
• Collaborative Planning
• Configurations for VMI
• VMI Benefits
• Option 1 Standard VMI
• Option 2 VMI with consignment model
• Option 3 Track Vendor Inventory without Oracle
  VMI
• QA

3
Overview on VMI

• Vendor Managed Inventory (VMI) is a procurement
  and planning practice in which a company
  delegates key inventory management functions to
  one or more of its suppliers. Under this
  arrangement the supplier determines the items,
  quantities, and delivery schedules on behalf of
  the customer based on information it receives
  from the customers inventory and procurement
  systems.
• Using VMI, manufacturers and distributors can
  anticipate customer needs and provide inventory
  more proactively than is possible using
  traditional procurement methods
• This Presentation will address how VMI can be
  accomplished by using a single, well-integrated
  suite of applications ( Oracle )

4
Pre-Requisites for VMI

• Oracle Applications 11.5.8 or
• Oracle Applications 11i prior to 11.5.8 with
  Family pack H for the following modules
• Oracle Inventory
• Oracle Purchasing
• Oracle Planning (APS)
• Collaborative planning is installed and
  Configured
• iSupplier Portal integrated with Collaborative
  planning for Supplier Collaboration (Optional)
• For VMI with Consignment model following modules
  need to be at 11.5.9
• Oracle Inventory
• Oracle Purchasing
• Oracle Payables
• Cost Management
• Warehouse Management

5
Oracle Architecture for VMI
6
Collaborative Planning
7
VMI Configuration Steps

• Enable VMI at the ASL level (Item Vendor
  Combination)
• Enter threshold values and other VMI related
  parameters at ASL level
• Setup VMI related profile options
• Run initial Data collection with complete refresh
  including user-company association
• Run VMI Replenishment Engine in Collaborative
  planning after data collection
• Configure Planner Workbench to handle VMI
  exceptions by Planners
• Optionally Configure to do Auto Replenishment
  by checking Allow Automatic checkbox at ASL
• Configure isupplier portal to be linked to
  Collaborative planning to effectively use
  Supplier Collaboration

8
VMI Benefits

• Benefit for the supplier
• The ability to access customer on-hand quantity
  information, forecast information, minimum and
  maximum inventory thresholds, in-transit
  inventory quantities and expected receipt dates
  in order to determine when to ship goods
• The ability to manually execute an approved
  purchase requisition or blanket release on the
  customer system and to track the status of the
  order through receipt, storage, and consumption
  by the customer
• The ability to automate replenishment proposals
• Benefit for the customer
• The ability to differentiate between goods that
  must be replenished by a supplier from those
  which are internally planned and replenished
• The ability to consume VMI materials in
  Work-In-Process or to explicitly take
  responsibility for planning from the supplier as
  needed
• The ability to better estimate suppliers
  production schedules based on anticipated demand
  from the customer.

9
Option 1 Oracle VMI
10
Option2 Oracle VMI with Consignment
11
Option 3 VMI for version prior to 11.5.8

• For Clients using Oracle applications version
  prior to 11.5.8 can implement VMI in one of the
  following ways by extending your Oracle
  e-business suite to support VMI
• 1. Create a Separate inventory Organization to
  stock and
• track Vendor inventory
• 2. Use ASN to track Vendor Inventory. As
  long as the
• inventory is managed by Vendor it will
  be considered
• as ASN In-Transit and when you want to
  consume the
• material receive the inventory against
  ASN into your inventory
• 3. Load vendor on-hand as vendor Capacity
  for each item vendor
• combination in ASL. Optionally load
  on-hand as MPS entries as
• well with ATP option checked and production
  option unchecked.
• This will enable to promise customer
  orders against vendor
• inventory when ATP is performed in OM

12
Profile
enrich IT enrich IT specializes in extending
your Oracle E-Business suite with strong
expertise in base application. Our unique model
allows low cost implementation of quick hit
projects for a fixed fee. Our normal
implementation time frame is 3 to 8 Weeks and we
promise on-time delivery. We partner with you in
developing Multi Generation Plan and executing in
Quarterly / Monthly Releases Arul
Murugan Arul Murugan, CPIM is a Managing
Principal Consultant with enrich IT and is
specializing in the implementation and upgrade of
Oracle e-business suite. He has been a functional
lead consultant / architect for about 8 years in
implementing Oracle for manufacturing and service
industry in the areas of Supply chain planning,
Manufacturing, Distribution and CRM. Arul has
done several successful full life cycle Oracle
implementations and also extended the Oracle
e-business suite for lot of clients after
Go-Live.
13
Contact Us
Arul Murugan, CPIM enrich IT Managing Principal
Consultant 404-723-1405 Arul_at_enrichIT.com