+ EDI (Electronic Data Interchange) is the computer‐to‐computer exchange of trade documents in a

standard electronic format between ERP systems of trade partners.

+ Vendor Managed Inventory (VMI) is an alternative to the traditional order‐based replenishment practice,
being a more efficient supply chain integration strategy and collaboration concept. In a VMI relationship, the
supplier is empowered to manage customer’s inventory and replenish the goods at customer site automatically
under agreed conditions and rules. Instead of sending the purchase orders, retailers send inventory and sales
information electronically to supplier. Based on this demand data, supplier makes periodic resupply decisions
regarding order quantities, shipping, and timing. The information about real demand will be
transparent to the vendor, reducing uncertainty for its production and operational planning.
+ CMI (Co‐managed Inventory) - order placed by the supplier is still a recommendation and is not a firm order
until approved by the customer

+ The benefits of VMI are mainly related to cost reductions, service improvements and greater transparency in
the supply chain. Quantitative performance improvements that customers using VMI have achieved include:
- Increase in availability of 2‐5%, (and related increase in sales revenues)
- Reduction in inventory levels of 15 to 40 % (and related decrease in capital costs)

+ Vendor Managed Inventory (VMI) This revolutionary concept turns the ordering process upside
down. The buyer does not need to order anymore, the right and responsibility is shifted to vendor.
Buyer sends regularly sales and inventory data (SLSRPT and INVRPT). Sometimes those two are combined into
product activity report (PROACT), especially widespread with SAP users. Vendor calculates the order based on
sales and inventory data, and agreed Min/Max levels, prepares the order and ships it. The rest of the process is
similar to BMI, in ideal case, there are both DESADV and RECADV documents in use, enabling invoices to reflect
actually accepted quantities to make invoice processing efficient.

+ Co‐managed Inventory (CMI) Co‐managed inventory is in between BMI and VMI. It is often used in
cases where buyer is not ready to give over the control of replenishment to vendor. Instead of fully
deciding replenishment, vendors create order proposals (ORDER PROPOSAL) and do not start picking
the orders without waiting for the confirmation from the buyer (in form of VMIORDER). The rest of
the process, once again, is the same as in BMI and VMI.