Business Process Definition – Vendor Managed Inventory Sample Clauses

Business Process Definition – Vendor Managed Inventory. Scope Vendor Managed Inventory (VMI) is a concept and process based upon a tight collaboration whereby the Supplier manages the inventory needed for the Customers manufacturing or trading process. It requires the Supplier to maintain the inventories within predefined and mutually agreed min / max-ranges of inventory levels based on consumption forecasting. The Supplier can freely deliver within these indicated ranges. These ranges may be updated within the VMI process, within limits defined in the contract between Customer and Supplier. VMI can be used when the inventory is under the ownership of the Customer, or of the Supplier (consignment stock). Process Definition Periodically the Supplier receives the consumption forecast and the inventory report (levels and movements) from the Customer. From this information he determines the planned deliveries and sends a delivery plan proposal to the Customer. In order to have a correct assessment of the consumption forecast it is recommended to send an inventory report (reflecting the latest situation of the inventory) shortly before sending the consumption forecast.
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