Vendor Managed Inventory

(VMI)
For BAAN
Vendor Managed Inventory (VMI): A means of optimising Supply Chain
performance in which the supplier is responsible for maintaining the
inventory levels. The supplier has access to the company’s inventory and
forward sales position.

Under the typical business model: When a company needs product, they
place an order against a supplier. The company is in total control of the
timing and size of the order being placed.

Vendor Managed Inventory model: When the supplier places inventory at a

customer’s location and retains ownership of the inventory. Payment is not
made until the item is actually consumed.

Dual Benefits:
§ Speed of the processing is improved.
§ Both parties are interested in giving better service to the end
customer. Having the correct item in stock when the end customer
needs it, benefits all parties involved.
§ A true partnership is formed between both organisations. They work
closer together and strengthen their ties.

Benefits:
§ A decrease in stock outs and a decrease in inventory levels.
§ Planning and ordering cost will decrease due to the responsibility
being shifted to the supplier.
§ The overall service level is improved by having the right product at
the right time.
§ The supplier is more focused than ever in providing better service.

Benefits to the Supplier:

§ Visibility to the sales data makes forecasting easier.
§ Promotions can be more easily incorporated into the plan.
§ A reduction in ordering errors (which in the past would probably
lead to a return)
§ Visibility of Stock Levels helps to identify priorities (replenishing for
stock or a stock out?). Before VMI, a manufacturer has no visibility
to the quantity and the products that are ordered. With VMI, the
manufacturer can see the potential need for an item before the item
is ordered.

What can eBECS offer that’s different from the rest?

eBECS have developed new procedures and routines which allows the VMI
position to be maintained outside of Baan. As Inventory is consumed within
Baan it is drawn from the VMI position. A set of alerts has been produced
to keep the supplier fully informed of inventory, usage and forward sales.

The solution has been specifically developed for Baan and involves minimal
customisation and implementation. The eBECS team is committed to
delivering a quick and efficient implementation with seamless integration
and a smooth operation so that you can achieve your targeted return on
investment. To facilitate this process, we offer a full complement of
consulting and integration, training and customer support services. Please
see the over side of this sheet that outlines the solution.
Vendor Managed Inventory
(VMI)
For BAAN
• Reduced supplier
base - vendor
Supplier maintains the inventory reduction.
Inv
en
Supplier usa tory • Reduced sourcing
ge and quotation
administration.

Inventory Inventory Inventory

• Reduced multiple
purchase orders.
• Reduced
Inventory flow and Ownership
expediting.

• Reduced
communication
costs.

Inventory Inventory Inventory

• Reduced multiple
deliveries and
back orders.
Production Issues
• Reduced multiple
invoices.
• Reduced stock
taking.
Production Production Production • Reduced stock
investment.
• Reduced gap
outs.
Sales and Forecasts • Reduced delivery
cycle time.
• Reduced
Sales
paperwork
transactions.
Figure 1 eBECS VMI for Baan

1. Inventory is issued from the suppliers warehouse, held within

customised sessions in Baan, therefore with no implication on the
financial position.
2. As Inventory is issued it is replaced by consumption from the VMI
position.
3. Suppliers self-billing invoice is matched against consumption for the
purpose of payment.
4. Inventory, usage Sales and Forecast information is automatically sent
to the supplier.

Dunston Innovation Centre 13 Austin Friars

Dunston Road London
Chesterfield S41 8NG EC2N 2JX www.ebecs.com
T: 01246 267708 T: 0207 6701684 enquiries@ebecs.com
F: 01246 267709 F: 0207 6701717