Supply planning by customer

Step 1. Customer plans supply

The customer plans the component supply required for production. The planning is based on the customer's current inventory, the firm demand, that is, outstanding sales orders or sales schedules, and the unconfirmed forecasted demand.

The resulting supply plan consists of a range of dates and times on which particular quantities are to be delivered. Ths supply plan includes a firm part and a planned, that is, unconfirmed part. In the contract between the supplier and the customer, the dividing line between firm and planned demand is laid down. Typically, the demand dated before a particular time fence is to be regarded as firm demand.

If the supply plan includes firm and planned demand, the customer typically uses purchase schedules. If it only includes firm demand, the customer uses purchase orders.

The customer will not request replenishment while having sufficient owned stock. If the owned stock partially covers the demand, the customer allocates owned stock before supplier-owned stock. Another example is if the customer has issued or consumed more components than required for production, and brings the surplus back to the VMI warehouse, while remaining the owner of these components.

The customer sends the supply plan to the supplier.

Step 2. Supplier commits to supply plan

The supplier checks whether they can fulfill the customer's requirements and commits themselves to the quantities that they can deliver according to the date/time schedule of the supply plan.

Optionally, the supplier commits themselves to the firm demand and the planned demand. For the planned demand, the supplier commits themselves to days rather than times. The supplier typically stores the committed and planned quantities as a sales schedule in their ERP system.

The supplier notifies the customer of the quantities they can commit themselves to. If the supplier cannot commit themselves to all requested quantities, the customer can look for other or additional suppliers, or alternative items.

Step 3. Customer sends call-off

In the purchase schedule, the customer enters a call-off against the committed quantities. In this scenario, replenishment of the component stock is triggered by purchase schedules or purchase orders and EDI/Rosettanet messages.

Step 4. Supplier replenishes the customer's stock

The supplier replenishes the VMI warehouse as required.

Because the supplier manages the VMI warehouse, the receipts are registered in their ERP system. To notify the customer of the receipts, the supplier sends RosettaNet-XML message Inventory Report to the customer. This message triggers an auto receipt in the customer's administrative warehouse. For more information, refer to Automatic receipts.

Other means of communication are also used, in which case the customer manually enters the receipt in their administrative warehouse. The received quantities are inserted in the customer's purchase schedule for each supplier.

If the ownership change rule is consigned, the customer becomes the owner when the items are issued for consumption.