Vendor Managed Inventory (VMI) is a business model where the retailer provides product activity (such as an EDI 852) to a vendor to compare against model stock for each store location. Once a vendor has this information, they integrate it with their wholesale ownership to determine production needs, what replenishment is needed by store and create reverse PO’s.
While Vendor Managed Inventory has in the past been mostly reserved for top tier suppliers, lately we see more apparel and accessory related buyers wanting their vendors to do more. It makes sense for them, as their resources are steadily reducing over time and pressure constantly increases to improve the bottom line. Improved turns and lower out of stocks resulting from this program (if well executed) surely help.
The really hard part of the program is to determine what the inventory should be for a given location.
Our understanding of the buyer-supplier relationship and all its nuances enables our retail analytics software to addresses key issues and offer sophisticated tools for calculating needs as well as reporting and data integration, including:
- Accurate and consistent flow of weekly sales and inventory data by SKU by Store.
- Auto-import of daily wholesale available to ship and future production.
- Ability to upload historic sales by SKU by Store.
- Ability to integrate weather, seasonality, promotional plans and other market or assortment changes that may affect sales – broken down at the appropriate level of planning.
- Ability to calculate and make up for lost sales.
- Algorithms to properly allocate based on different events (not enough inventory to ship to all stores that need, open to buy limitations, build up for special events, etc.).
- An interactive reporting platform to easily view retail exceptions and roll needs and estimates in user defined formats.
- A system designed to pick up trends more quickly than retailer’s auto replenishment systems to reduce lost sales.
- Automatic generation of replenishment quantities that give the user an easy means to adjust the orders via integration with a Business Intelligence/Ad-hoc reporting platform.
- Output to a variety of formats such as csv, XML, Walmart SSO or other retailers’ reverse PO format.
- Delivery of reverse PO documents directly to the retail partner or via a client’s VAN.
Contact Enhanced Retail Solutions to learn how our software and consulting can help you optimize your VMI efforts.