Vendor Managed Inventory and Demand Visibility

VMI is essentially a distribution channel operating system whereby the inventory at the distributor/retailer is monitored and managed by the manufacturer/vendor. It includes several tactical activities including, determining appropriate order 

D Supply chain No supply chain Internal enterprise Supply chain 

VMl was popularized in the late 1980s by Wal-Mart and Procter Gamble (WaUer et al. 1999), and then, it was subsequently implemented by many other leading companies from different industries, such as GlaxoSmithKfine (Danese 2004), Electrolux Italia (De Toni and Zamolo 2005), Nestle and Tesco (Watson 2005), etc. 

Based on Hall (2001), there are two EDI (Electronic Data Interchange) transactions at the heart of the process as illustrated in Fig. 4.16. 

The first is the Product Activity Record, frequently referred to as an 852. The data contained in this document are sales and inventory information. The inventory data is typically segmented into various groups, such as on hand, on order, committed, back ordered, and so forth. This transaction is the backbone of VMl, and is sent by the customer on a prearranged schedule, typically, daily. The decision to order is based on this data. 

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