TrueCommerce Datalliance receives data from a distributor, retailer or end user called a Product Activity Report. The report contains information such as sales, product transfers, and inventory position (on hand, on order, in transit).
TrueCommerce Datalliance’s VMI platform reviews the data and sends a recommended replenishment order.
The supplier reviews the recommendations.
The supplier then creates a purchase order and sends to a customer (distributor, retailer, end user).
Once the customer approves the purchase order, the order is shipped.
In a Vendor Managed Inventory, the supplier receives usage data from the client and uses this information to automatically generate replenishment orders. The supplier ensures that the agreed-upon inventory levels are maintained by considering factors such as lead times, demand forecasting, and seasonal fluctuations. This approach enables more proactive inventory management, reduces the administrative burden on the client, and allows the supplier to better forecast and plan their production.
Consider a VMI relationship between a large retail chain and a beverage supplier. The retail chain shares real-time sales and inventory data with the supplier. Based on this data, the supplier can automatically generate orders to replenish stock, ensuring that the store shelves are always stocked with popular beverages. The supplier takes into account the lead time required to produce and deliver the beverages, historical sales data to predict future demand, and seasonal trends (e.g., increased demand for cold drinks in the summer). This proactive approach minimises stockouts and excess inventory, benefits the retailer by reducing the need for manual ordering and inventory management, and helps the supplier optimise their production and distribution schedules.