VMI Vendor Management Inventory

1. VMI Vendor Management Inventory Benefits of Vendor Managed Inventory Operated by World Supply Chain Solutions

2. Concept • VMI is a streamline approach to inventory management and order fulfillment. VMI involves collaboration between suppliers and their customers. Instead of sending Purchase Orders (PO), customers electronically send daily, weekly or monthly information to the supplier. The supplier generates replenishment orders for the customer based on this demand information. The process is guided by mutually agreed upon objectives for the customer’s inventory level, fill rates, and transaction. • The goal of VMI is to align business objectives and streamline supply chain operations for both suppliers and their customers.

3. Advantages • For the customer • Reduced inventory/increased turns one of the biggest opportunities for customers savings from VMI helps increase turns by reducing the need for safety stock • Reduced administrative cost VMI fundamentally reduces the cost of purchasing administration for the customer, the supplier takes on most of the responsibility for replenishment, and there are fewer rush orders since demand and inventory are monitored more frequently. • Fewer stock-outs or shortages VMI improves customers service rates due to fewer stock-outs, because the supplier now has a full visibility of true demand, along with better information about lead times, product launches, and packaging changes, and they can recognize the need to replenish before stock-out • Increased sales As described above, VMI offers the benefits of improved turns, reduce administrative costs and fewer stock-outs, fewer cost sales opportunities, and better demand visibility, means always have the right product in the right place at the right time.

4. Advantages • For the suppliers • Increased sales Many suppliers see an increase in sales of 5-25% due to: • Fewer stock-outs • Improved product mix, based on better demand visibility • Better collaborative planning for promotions, new products introduction and enabling the supplies to take advantages of special sales opportunities • Reduced operating costs Even though the suppliers take on the responsibility for the replenishment in a VMI relationship, the savings and operating cost alone can easily offset the cost of doing VMI. • Fewer emergency orders due to poor customer ordering habits (expedite due to stock-outs) • Fewer returns or dead inventory, damage product created by poor customer management or lack of collaboration on product replacements etc. • Reduce transportation costs due to fewer emergency orders and improve ability to recognize order consolidation opportunities

5. Chart Flowexample using private clubs, however any company would be compatible

6. Overview • Reduces paperwork and streamlines the order process from the customer. • More accountability and faster response time from the supplier. • More flexible on shipments as product(s) are stored and available on quantities needed ranging from (1) pallet through entire truckload. • Substantially lower transportation cost, storage, delivery and handling fees. • Higher ROI while maintaining “Value added service” over conventional order shipping and storage. • Savings on payroll by using less employee hours to manage the process • Communication, invoicing and data streamlined for easy record keeping and inventory control. • Customized reporting for each product from suppliers to the customer. • Web access 24/7