VMI – Vendor Managed Inventory

VMI – Vendor Managed Inventory

Vendor managed inventory (VMI) helps distributors optimize its capital in making purchase ensuring sufficient stock for delivery between 2 consecutive ordering. It also help company control amount of inventory at safe level, avoid out of stock the reason of reducing market coverage.

In sales and distribution management, it is essential to maintain a stable business between manufacturer and distributors. Based on historical information of each distributor and sales target from manufacturer, VMI can automatically suggesting orders, record account payable for distributor and account receivable for manufacturer, as well as updating delivery/ order status to distributors.

Release users from manual and ineffective works

Sales department does not need to re-enter order sent by distributors in excel or fax.

Accountants or sales admins at distributors do not need to enter delivery notes into system when goods are delivered to distributors.

Minimizing incorrect input data

By integrating DMS with the company’s current system, accountants at distributors just need to confirm the actual quantity of goods delivered to their warehouse. Once manual works are minimized, so do human errors.

Measuring the delivery capability of the distributors

By integrating 2 systems, the company can manage information from ordering to receipt of goods. Thus, you can evaluate the needs of market compared with the delivery capability of distributors. In addition, the company can also manage delivery time, the process of delivery between warehouse of company – delivery truck – warehouse of distributors.


The formula for calculating the recommended purchase order (RPO)

The formula is based on purchase history of distributors, current stock, ordering/delivery schedule of company, sales plan of the month, safety stock.

Allocation management

In some cases, company just allow distributors order a limited quantity and orders need to be proposed in that quantity.

Promotion management

At the time of purchase, if there is any on-going promotion, the system will automatically propose a relevant quantity to distributors to enjoy the promotion.