Research Paper On VMI

Company is facing a challenge of potentially higher inventory costs. Rising prices may further result in changes in customer behavior and preferences.

The document also includes an in-depth implementation plan, which is broken down into short, medium, and long-term tasks to accomplish. Through out the document there is a mention of the vendor managed inventory model (VMI). By using VMI, we were able to use a different approach to avoid risks associated with

Schenck, J., McInerney, J. 1998. Applying vendor-managed inventory to the apparel industry. Automat. I.D. News 14(6) 36-38

Since Wal-Mart is a mass market retailer, its primary source of value that it adds to the company is derived from its supply chain. Wal-Mart has suppliers located all over the world and it purchases goods from a wide range of different types of vendors. Many of the company's primary vendors are directly connected to Wal-Mart's IT systems through what is referred to as an electronic data interchange (EDI). An EDI can instantaneous transmit data between Wal-Mart and their vendors. Such information can consist of order information, stock supplies, demand forecasting and many other key supply chain metrics. The advantages of such a system are clear as they can greatly assist creating efficiencies in the supply chain. However, not all suppliers have developed sufficient IT technologies to participate in an EDI program with Wal-Mart. Another option for greater coordination between parties in the supply chain is web-based supplier integration. Although the web-based systems are not quite as sophisticated as an EDI, they are more accessible for many of the smaller suppliers and they have shown to improve long-term coordination, cooperation, and commitment.

worldwide to serve the customers and is famous for the variety of products that it provides in the

Before summarizing how West Marine was able to implement a successful CPFR system, it is necessary to explain exactly what CPFR actually is. Collaborative Planning, Forecasting, and Replenishment (CPFR) is a system used by companies to enhance their current supply chain procedures. CPFR seeks cooperative management of inventory through joint visibility and replenishment of products throughout the supply chain.

When offers of reduced pricing are accepted for equipment, meeting delivery expectations becomes an important part of enhancing the customer experience to maintain satisfied loyal customers. An inventory specialist in the current distribution center would be given the additional task of segregating and maintaining inventory levels to meet the needs of the customer loyalty department.

Effective supply chain management can provide an important competitive advantage for a business marketer, resulting in improved communication and involvement among members of the chain, increased motivation, and decreased costs. Tracking the movement of and demand for components used to manufacture a product across a variety of potential and actual suppliers, provides insight and the ability to respond instantly to shortages, surpluses, and changes in market conditions. It seeks to optimize production, decrease manufacturing time, minimize inventory, streamline order fulfillment, and reduce cost.

West Marine, a large boating and fishing retailer with over 300 stores in North America with more than 50,000 products is planning the acquisition of BoatU.S. and the subsequent integration of the two supply chains. Although the management of West Marine has made significant progress in the implementation of CPFRprinciples over the six years since the E&B Marine acquisition, there are still qualms about how well the current Supply Chain and planning process can incorporate BoatU.S.'s product line. Each company maintains 750 suppliers with only 100 in common (or ~13%), with only 20% of products in common.BoatU.S. does not provide forecasts to suppliers or participate in any other CPFR activities as does West

A goal is to replace inventory with frequent communication and sophisticated information systems to provide visibility and coordination. In this way, merchandise can be replenished quickly in small lot size and arrive where and when it is needed. Quick, frequent and accurate information transfer among members of the supply chain can counteract the distortion of information (known as the bullwhip effect) as it passes up the supply chain from the end customer. A supply chain can reduce overall inventory while maximizing customer service by efficiently redistributing stock within the supply chain using effective postponement and speculation.

However, consignment is much like an interest free loan in which the DC is able to take on inventory without paying for the product until after it has been sold. The receiving company is responsible for only paying capital and taxes and the supplier is responsible for storage and material handling. This provides the DC a reduction in cost with savings from 36% to 18%. Additionally, customers of the DC are responsible for any damage or disappearance of goods on their property. Typical benefits of implementing the VMI software is increased sales, more efficient production scheduling, 5%-20% decrease in product returns, and 10%-30% increase in service levels, just to name a few (Vendor Managed Inventory, n.d.)

The class text states that Supply chain management is frequently divided into supply chain planning applications, supply chain execution applications, logistics management, and warehouse management. Often when companies fail at implementing an efficient supply chain because of the planning section, or inaccurate demand forecasts. The text states electronic data interchange is one of the earliest uses of information technology for supply chain management, Electronic data interchange is the use of the Internet for everyday business transactions. “In this era of information a firm’s supply chain should operate at speed of thought and this is possible only by enhanced e-speed communications and information sharing with their critical partners.” (4)

Some of the business models such as Vendor-Managed inventory and Customer-Managed inventory are following the similar approach.

DIMCO may gain many advantages by implementing supply management chain. Implementing SCM can reduce problems within the company’s internal functions, external suppliers, and external distributors. Some advantages DIMCO can gain from implementing SCM are as follows; the supply chain would improve the quality of service to the end user; reduce channel cost; and create a competitive advantage. (Reid & Sanders, 2010) The implementations of SCM will strengthen DIMCO partnership with suppliers and distributors. Supply chain management can also prevent such challenges such as the bullwhip effect, caused by erratic replenishment of orders placed on different levels in the supply chain that have no apparent link to final product demand. (Reid & Sanders, 2010) An effective and efficient SCM will allow partners to share information concerning health, safety, government regulations and environmental issues. SCM will provide a common network for communications, suggestions, and feedback. This will assist DIMCO in meeting the need of customers quickly and in an efficient manner. Overall, SCM would assist in

According to (Hill and Hill, 2012), synchronising all supply chain activities through using the same data, and completing production at the scheduled time, coordinated between the manufacturer and suppliers,