Full VMI - procedure

The following procedure outlines the steps that the supplier and the customer take to communicate demand, plan supply, supply stock, consume stock, send invoice, and pay for the goods. These steps comprise the full VMI scenario, but some of these steps also apply to various other scenarios, and some steps can be carried out by the customer instead of the supplier or vice versa, which is indicated where applicable.

For some of these steps, you can use other sessions or options to use different functionality, but the following procedure is recommended for most situations, which is described in:

Step 1. Customer sends planned consumption to supplier
  1. In the Sales Orders (tdsls4100m000) session, the customer generates a sales order for the items that they will sell to their customer.
  2. In the Generate Order Planning (cprrp1210m000) session, the customer performs an MRP run to make an estimate of the item or component quantities that they must purchase from the supplier to fulfil the order generated in the previous step.
  3. In the Approve Forecast to Supplier (cpvmi0202m000) session, the customer approves the forecast data before sending this information to the supplier.
  4. In the Forecast to Supplier (cpvmi0102m000) session, the customer sends the forecast data to the supplier.

This step can also apply to other scenarios in which the supplier performs supply planning, such as:

Step 2. Supplier plans supply
  1. In the Accept Forecast from Customer (cpvmi0206m000) session, the supplier accepts the forecast data that they receive from the customer. For this purpose, ensure that the cluster is inserted in the cluster segment (the outer left section) of the plan item fields.
  2. In the Forecast Revisions from Customer (cpvmi0506m000) session, the supplier checks and approves any forecast revisions that they receive from the customer.
  3. In the Generate Planned Supply based on Forecast (cpvmi1211m000) session, the supplier generates planned distribution orders based on the approved forecast. If no planned orders are generated, rerun this session and select the Print Exception Messages check box.

  4. In the Generate Confirmed Supply (cpvmi1210m000) session, the supplier generates confirmed supply based on the planned orders generated in the Generate Planned Supply based on Forecast (cpvmi1211m000) session.

    This step is required if, in the Terms and Conditions Line (tctrm1620m000) session, on the Planning tab, the Confirm Supply check box is selected for the relevant terms and conditions agreement.

  5. In the Planned Orders (cprrp1100m000) session, the supplier transfers the planned distribution orders to warehouse transfer orders using the Transfer Order Planning option on the appropriate menu. Note that the supplier does not execute the transfer orders until the supplier has approved and sent the confirmed supply to the customer and the customer has approved the confirmed supply from the supplier.

  6. The supplier approves the confirmed supply using one of the following methods:

    • In the Approve Confirmed Supply to Customer (cpvmi0208m000) session, approve the confirmed supply for a range of items. Specify which checks the session must apply before approving the confirmed supply.
    • In the Confirmed Supply to Customer (cpvmi0108m000) session, click Approve to approve the confirmed supply for one particular item.

This step can also apply to other scenarios in which the supplier performs supply planning, such as:

For more information, refer to To perform the supply planning for your customer - Procedure in the User Guide for Supply Planning by Supplier (/guides/U9482AUS).

Step 3. Customer approves supply
  1. In the Accept Confirmed Supply from Supplier (cpvmi0205m000) session, the customer approves the confirmed supply from the supplier.
  2. In the Item Supplier Plan (cpvmi0530m000) session, the customer views the item-business-partner plan created for the current item and supplier.
Step 4. Supplier replenishes the customer's stock
  1. After the customer approves the confirmed supply from the supplier (see previous step), in the Warehousing Order (whinh2100m100) session, the supplier performs the required outbound and inbound steps to execute the transfer order from the supplier's warehouse to the VMI warehouse, which is a regular warehouse in the supplier's system. Refer to the online Help of the Warehousing package for details.
  2. In the Initiate Automatic Receipts (whinh3223m000) session, the customer initiates automatic receipts to update the VMI warehouse, which is set up as an administrative warehouse in their ERP system. For more information, refer to To update the administrative warehouse.
Step 5. Supplier issues stock for customer

The supplier issues stock for the customer, usually based on call-offs from the customer. The customer will consume the issued stock for sale or production.

The supplier and the customer register the issue in the VMI warehouse in their ERP systems.

In the customer's ERP system, a payable receipt and a consumption record are created. The consumption record is stored in the Consigned Consumptions (whwmd2551m000) session and linked to the purchase order and the receipt for which the consumed goods were originally received in the warehouse. For more information, refer to Consumption records.

In the supplier's ERP system, the supplier creates a sales order with payment type Pay on Receipt after they issue the goods for consumption. This sales order will initiate the invoicing process (see the following step).

This step can also apply to other scenarios in which the supplier performs inventory management, such as Supply planning by customer.

Step 6. Invoicing

Either the supplier or the customer initiates the billing process. If the supplier triggers the invoicing:

  1. For the sales order with payment type Pay on Receipt, the supplier creates invoice lines in the Sales Order Invoice Lines (tdsls4106m100) session.
  2. In the Release Sales Orders/Schedules to Invoicing (tdsls4247m000) session, the supplier releases the invoice lines to Invoicing.
  3. In the Billing Requests (cisli2100m000) session, the supplier creates a billing request.
  4. In the Compose/Print/Post Invoices (cisli2200m000) session, the supplier creates the invoice. As a result, LN processes the originating sales orders.

Alternatively, the customer employs a self-billing process to make aggregated payments at fixed intervals, such as once a month. For more information, refer to Self billing or the online Help of the Financials package.

Invoicing initiated by the customer or the supplier applies to all VMI scenarios.

Step 7. Payment

The supplier matches the customer's payments, based on self-billing or invoices from the supplier, with the open amounts. For more information, refer to Payment and receipt methods or the online Help of the Financials package.

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