The proposed agreement has a flexible structure and can be easily taken up by the staff concerned in order to properly define and implement BMI in several industrial sectors. Data is generally updated weekly and transmitted through an EDI that predicts actual market trends. The data are based on actual quantities of items produced and sold. This information exchange agreement aims to maintain a continuous flow of necessary goods. The lender verifies the information received by the lender and the search for a contract is based on an existing agreement between the lender and the debtor. Vendor Managed Inventory or VMI is a process in which the lender creates orders for its debtors based on the information on the needs it receives from the Debitor. The lender and the debtor are bound by an agreement that determines inventories, filling rates and costs. The aim of this document is to define the standard structure of a VMI (Vendor Managed Inventory) agreement, which can be used as a guideline for the early definition of the agreement. Based on a relevant industrial application, the flow of information and technical details to be defined before the start of the operation are identified and discussed. This data is used as key elements to define the basic framework of the agreement. Particular attention is paid to the “Technical Specifications” and “Service Level Agreement” sections. It appeared that a BMI agreement should be organized in part on the general and legal aspects of the agreement, while technical and relationship issues should be addressed in the annexes. This increases the flexibility of the agreement to the extent that, over time, the amendments only concern the annexes, which leave the main part of the agreement unchanged.
Zammori, F., Braglia, M. and Frosolini, M. (2009), “A standard agreement for vendor managed inventory,” Strategic Outsourcing: An International Journal, Vol. doi.org/10.1108/17538290910973376 By moving closer to BMI from a practical point of view, this paper identifies the key issues that need to be addressed in the agreement in order to meet the needs of both parties and to ensure benefits on both sides. The manufacturer is aware of the distributor`s inventory and sales figures because the company`s business resource planning systems are linked. Orders are established and inventories are managed by the manufacturer at agreed levels. Retailers such as Walmart use vendor-managed inventory with great success. Some suppliers send their customers a prior notification of the shipment to inform them of an incoming order known as EDI 856. The manufacturer can benefit from a number of advantages of the vendor-managed inventory, as it can access the data pos (customer point of sale), which makes forecasting a little easier. Manufacturers can also translate their customers` advertising plans into forecast models, which means there will be enough warehouses available when their promotions are in progress. The stock managed by the creditor is not reserved for large companies. For those with long delays, a VMI can help relieve this.
The supplier can create containers to reduce inventory and increase purchases, which in turn is considered by SKU in different categories, resulting in significant savings. Your creditor can help you manage the costs of variables in stock. This relates to the type of demand information that is shared by customers to help suppliers control their inventory. Many types of needs information are shared under the VMI program. Information on the needs that are visible to the supplier are sales data, inventory collection, production plan, stock, goods in transit, order delivery, orders and return.