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Vendor Managed Inventory (VMI)

Highlights

Vendor Managed Inventory (VMI) is a replenishment model in which a supplier is responsible for fulfillment against orders issued on behalf of the manufacturer and based on demand information. During this process, all parties are guided by mutually agreed upon objectives for inventory levels, fill rates and transaction costs.

Typical VMI fulfillment process:

  1. The manufacturer provides daily production material needs via EDI to Ryder.
  2. Ryder pulls the requested material from inventory and coordinates delivery to the manufacturing facility.
  3. Ryder sends transaction details and replenishment needs via EDI to the vendor(s) on a daily basis.
  4. The vendors analyze the information provided by Ryder to fulfill purchase orders and maintain set inventory levels.

Benefits

    Contributes to supply chain optimization
    Improves visibility across the supply chain
    pipeline
    Improves production planning and
    forecasting
    Reduces inventory levels and safety stock
    Reduces fulfillment costs and lead times
    Improves in-stock availability and inventory
    turns
    Increases replenishment accuracy and
    decreases potential returns. Enables
    inventory management at retailer level
    Improves service level agreements by
    supplying the right product at the right time

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Case Studies

Lucent
Pilot Pen Mexico
Whirlpool

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