Replenishment methods (VMI)

This topic describes how a VMI supplier can replenish inventory at a customer. The replenishment plan is usually agreed between the supplier and the customer.

Planning methods and replenishment methods

For the purpose of this description, the terms planning and replenishment are defined as follows:

Planning
Planning is the process of generating planned orders based on the requirements of the customer, intended to replenish the warehouse at the customer. This process drives the generation of planned production orders, planned purchase orders, and planned distribution orders used to build up inventory in the supplying warehouse from which the supplier supplies the customer.
Replenishment
Replenishment is the process of transferring planned distribution orders to the execution level to start the actual delivery of items to the warehouse at the customer's site. In case of direct delivery, you do not use a planned distribution order but a planned purchase order.

If you select the same method for the planning and the replenishment, the replenishment closely follows the planning; all planned orders are transferred to the execution level and executed without further delay.

Important!

If you use different methods for the planning and the replenishment, some planned orders are not immediately transferred and executed. You can use that setting to build stock at your site as determined by the planning method, but ship the items later, as determined by the replenishment method.

Available methods

To specify the replenishment method, use the Replenishment Based On field on the Terms and Conditions Line (tctrm1620m000) session's Planning tab.

The following table describes the available settings.

Replenishment Based On	Description	Further information
Total Forecast	LN bases the replenishment on the total forecast, received in messages from the customer.
Confirmed Forecast	Similar to Total Forecast, but LN only takes the confirmed part of the forecast into account.
Confirmed Supply	You determine a confirmed supply that you communicate to your customer. You can base the confirmed supply on the total forecast or the confirmed forecast, and optionally adjust the confirmed supply manually. LN bases replenishment on the confirmed-supply data.	VMI planning based on confirmed supply
Inventory Level	LN bases the replenishment on the agreed minimum inventory levels.	Replenishment based on minimum inventory
Manual	LN does not transfer any planned order. You make deliveries manually, independently from any planned order. When a subsequent planning run takes the actual deliveries into account, the existing planned orders are not generated again.	To specify the minimum and maximum inventory

Possible combinations of planning method and replenishment method

To specify this planning method, define an appropriate terms and conditions agreement on the Terms and Conditions Line (tctrm1620m000) session's Planning tab.

Note

You must enter the Replenishment Based On field before you enter the Planning Based On field.

The following table displays all permitted combinations of planning method and replenishment method:

		Replenishment Based On
		Total Forecast	Confirmed Forecast	Confirmed Supply	Inventory Level	Manual
Planning Based On	Total Forecast	A	B	-	D	E
	Confirmed Forecast	-	A	-	D	E
	Confirmed Supply	-	-	A / C	D	E
	Inventory Level	-	-	-	A / D	-
	Manual	-	-	-	-	F

Legend:

A	=	The Planning Based On field has the same value as the Replenishment Based On field. The replenishment closely follows the planning. All planned orders are transferred to the execution level and executed without further delay.
B	=	Planning on total forecast, replenishment on confirmed forecast
C	=	VMI planning and replenishment based on confirmed supply. For more information, refer to VMI planning based on confirmed supply.
D	=	The execution of the planned orders is delayed until the last moment. For more information, refer to Replenishment based on minimum inventory.
E	=	Manual replenishment
F	=	No planning at all
-	=	Combination not permitted

Replenishment method different from planning method

If you use different methods for the planning and the replenishment, the planned orders are divided in two groups:

Order Release = To be released
LN permits you to immediately transfer these planned orders to the execution level.
Order Release = Not to be released
Planned orders not immediately required for replenishment. LN prevents you from transferring these planned orders to the execution level. If the situation changes, a later planning run can replace these planned orders by planned orders set to To be released.

In urgent cases, you can manually change the Order Release field from Not to be released to To be released.

To view the value of the Order Release field for a planned item, use the the Planned Orders (cprrp1100m000) session.