Addressing supply chain issues

Collaborative opportunities within the Building Industry

Vendor Managed Inventory - or how to release much needed working capital.

Suppliers and customers benefit from the reduction in administration, customers benefit from less time spent planning and releasing orders.

Suppliers gain by getting better longer-term forecast, leveraging their own expertise in forecasting demand, planning promotional activity, and gain a degree of flexibility in scheduling deliveries to maximise transport efficiency.

Supply Chain Performance Analysis: Increasing need for suppliers and customers to have immediate and accurate real-time visibility of the performance of their supply chain.

Customers and suppliers gain from having accurate performance metrics on key stages of both customer and supplier order fulfilment.

Real-time analysis allows customers and suppliers to react early to hidden issues within the supply chain before customer service levels are adversely affected.

Invoice Matching: Costly manual processes, inaccuracies, slow turnaround, delays in error resolution, need for constant cross-checking.

Disparities leading to delays in payment.

Collaborative Forecasting: An inability to share accurate and real-time demand and other forecast information with your trading partners.

Establishing an intelligent electronic trading network: Electronic trading is now accepted as a basic requirement for the sharing of information within a supply chain.

Satisfying customer trading mandates and sharing key information within your supply chain using conventional electronic trading solutions can be technically complex, time consuming and costly, with limited functionality.

Establishing an intelligent electronic trading network takes conventional electronic trading further by removing traditional barriers of entry and delivering additional functionality and value to an electronic supply chain.

'What would normally take other consultants months if not years to scope, set up and pilot has taken Wesupply a matter of weeks' Caradon 'Successful vendor-managed inventory (VMI) programs reduce inventory by 70% and increase revenues by 100% with lead time reductions up to 50% VMI delivers real monetary benefits and closer customer relationships - success in VMI comes from having flexible business processes and technologies tailored to each business process'.

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Building.

'We keep the best company'.

Your business - Your issues - Your Supply Chain.

Addressing supply chain issues that affect you today.

Your Critical Supply Chain Issues.

Vendor Managed Inventory (VMI).

Properly executed, Vendor Management.

Inventory enables a customer to relinquish responsibility for managing stock levels to their suppliers, eliminating the time-consuming and error-prone administration of traditional ordering, whilst at the same time improving service levels and freeing up capital.

VMI enables suppliers to achieve the optimal balance between delivering a high level of service and low level of inventory holding.

At the start.

Buying a solution doesn't mean you're buying a shopping list of the latest technology - you should ensure that the supply chain solution ties in to business goals - in that way the functionality covers all aspects of the business mapping process and there are no unexpected surprises at 'go live'.

So preparatory to embarking on a VMI strategy you need to understand why and what you hope to gain to ensure the success of the process and the underpinning technology that will support it.

This juncture may also present an ideal opportunity to redefine the Service Level Agreement (SLA) clarifying such elements as payment terms, responsibilities and anticipated service levels.

What are the benefits?.

Reduction in stock holding or a shift to pay-on-consumption releases much needed working capital for other parts of the business - Allows suppliers to ensure correct product mix is in stock to meet end user demand.

Clearer visibility for the supplier of the stock in the customers branch or warehouse.

Implementing a sound VMI solution automatically removes the whole order/acknowledgement/delivery/paperwork administrative cycle - all the opportunities for errors are reduced to a minimum - in other words dependence on the multi-various business systems needed to handle these processes are replaced by a simple payment for goods delivered or consumed combined with period inventory counts to ensure they match input/output result.

Vendor Managed Inventory leverages the supplier's product knowledge and forecasting ability - which may be superior to the customer's - they will also be aware of new product development and product line obsolescence.

A supplier can also better control changes in demand and volatility due to levels of promotional activity.

So what is needed?.

* A collaborative platform providing complete transparency to customer and supplier and capable of supporting a gradual transfer of control without loss of visibility.

* An accurate view of stock levels (preferably driven from point of sale data) or simply information on sales which can be combined with input information to derive stock level.

* The most accurate demand forecast available, coupled with the ability to review forecast accuracy.

* Ideally, short manufacturing and/or lead delivery times or, very accurate mapping of goods in transit with accurate ETA.

* Robust systems accessible by both parties, tracking performance (actual versus forecast consumption, variance from either minimum or maximum balance, stock-out period and potential lost sales, and the financial implication of overstock.).

* Interfaces to customer systems especially point of sale data.

* The ability to collaborate on the review of sales forecast.

* A degree of freedom to vary stock levels maximising transport efficiency within minimum and maximum constraints.

* Step-by-step implementation strategy -beginning with a small set of products/suppliers.

The 6 steps to VMI 'go live':.

Step 1.

VMI must be identified as a strategic objective and communicated throughout the organisation with management committing to costs.

Step 2.

All employees should 'buy' into the concept - acceptance will pay dividends in the future.

Step 3.

Initial synchronisation (matching) of all data files between suppliers and customers is critical.

Step 4.

There should be a broad and comprehensive testing of all EDI sets to be used - suppliers and customers to work closely to verify that the data is accurately sent and received.

Step 5.

Acceptance and Measures must be in place - the customer must understand and agree with the stocking plan that the supplier is creating - this will then avoid future questions and misunderstandings.

Step 6.

The customer must send the supplier the point of sale (POS) file history allowing the supplier to base the inventory plan on direct sales rather than historical ordering data.

Contact us for more information on how Wesupply can help with your vendor managed systems.

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