VMI customer role - setup

Modelling the VMI scenarios relevant to your organization requires various parameter settings. If your organization buys goods on a VMI basis, set up the customer role. If it sells goods on a VMI basis, set up the supplier role.

The most important settings for the customer role are described below.

Organizations that use warehouses of type Consignment (Not Owned) or Consignment (Owned) can continue to do so, but then the VMI functionality is unavailable.

Step 1. Implemented software components

In the Modules tab of the Implemented Software Components (tccom0500m000) details session:

  • Select the Terms and Conditions check box.
  • Clear the Ownership Internal check box.
  • Clear the Use Confirmation (Purchase) check box.
  • Select the Ownership External and the VMI (customer side) check boxes.

These settings are relevant to all VMI scenarios. For more information, refer to Overview of VMI business scenarios.

Step 2. Clusters

In the Clusters (tcemm1135m000) session, clear the External check box and leave the Sold-to Business Partner and Ship-to Business Partner fields empty for all scenarios, because these settings relate to the supplier role.

Step 3. Warehouses

In the Warehouses (whwmd2500m000) session, set up the VMI warehouse. In the Supply planning by customer and the Full VMI scenarios, this is modeled as an administrative warehouse. Consider the following fields and check boxes:

  • Include in Enterprise Planning

    We recommend that you select this check box for scenarios in which the customer performs supply planning for the VMI warehouse, otherwise clear this check box.

    If the VMI warehouse is also used for storage and inventory handling of goods belonging to business partners outside the current VMI relationship, such as other suppliers or the customer's own customers, clear this check box.

  • Inventory Management

    Select this check box if the customer performs inventory management:

    For more information, refer to Overview of VMI business scenarios.
  • Business Partner

    If you cleared the Inventory Management check box, in this field, select the business partner who is to carry out inventory management. This applies to the following scenarios:

  • External Site
    In this field, select No for all scenarios, because being the customer, the VMI warehouse belongs to your company.

  • Also, leave the corresponding business partner fields empty:

    • Buy-from
    • Ship-from
    • Sold-to
    • Ship-to
Step 4. Item

To set up items:

  • In the Items - Defaults (tcibd0102m000) session, select Purchased in the Item Type field for all scenarios.
  • In the Items - Ordering (tcibd2100m000) session, select Planned in the Order System field for all scenarios.

  • In the General tab of the Items - Planning (cprpd1100m000) session, consider the following fields:

    • Supply Source
      Select Item Source for all scenarios. Therefore, the value of the Actual Supply Source field changes to Purchase.
    • Default Warehouse
      For all scenarios, enter the VMI warehouse specified in the previous step.
    • Master Plan
      We do not recommend to select this check box for VMI scenarios. For other scenarios, the organization's planning requirements determine whether to choose master planning. For more information, refer to the online Help of the Enterprise Planning package.

  • In the Registration Level field in the General tab of the Item - Warehousing (whwmd4100s000) session, you can specify whether and how the ownership of the inventory must be registered.

    For scenarios in which the supplier or an LSP performs warehouse management, and therefore the VMI warehouse is an administrative warehouse in the customer's ERP system, ownership registration on warehouse level should be sufficient.

    Otherwise, the required ownership registration level depends on whether the VMI warehouse contains owned and not-owned inventory, or inventory owned by various business partners. The scenarios in which the customer performs warehouse management are:

  • In the Registration Level field in the Item Data by Warehouse (whwmd2510m000) details session, you can specify whether and how the ownership of the inventory must be registered for a warehouse - item combination. See the previous list item for information about the ownership registration levels for each scenario.

Step 5. Terms and conditions

  • In the Terms and Conditions (tctrm1600m000) session, consider the following fields relevant to all scenarios:

    • In the Terms and Conditions Type field, select Purchase.

    • For search level 1, the recommended attribute for Search Attribute 1 is Item Group, for Search Attribute 2 it is Warehouse. In this way the terms and conditions apply to all items of the item group. Other attributes used to group items for a particular set of terms and conditions are Product Type or Product Class.

      For search level 2, to set up terms and conditions for specific items, the recommended attribute for Search Attribute 1 is Item, and for Search Attribute 2 it is Warehouse. In the Priority field, set a higher priority than the one for search level 1.

      For search level 3, to set up general terms and conditions for items not covered by the terms and conditions that match search levels 1 and 2, do not define any attributes.

    Preferably select the following check boxes for all scenarios:

    • Planning
    • Order
    • Logistics
    • Invoicing
    • Demand Pegging
    For example, setting up planning terms and conditions might not be necessary for scenario Supply planning by customer. The availability of these check boxes depends on the search attributes selected for the above search levels.
  • In the Payment field of the Order Terms and Conditions (tctrm1130m000) session, select Pay on Receipt for scenario Planning by supplier. Otherwise, we recommend to select Pay on Use.
  • In the Planning Terms and Conditions (tctrm1135m000) session, consider the following fields:

    General

    • Supply Planning by Supplier

      For the following scenarios, preferably clear this check box, because the customer performs supply planning:

      Otherwise, select this check box.
    • Send Forecast to Supplier

      For the following scenarios, preferably clear this check box, because the customer performs supply planning, so the supplier does not need a forecast:

      Otherwise, select this check box.
    • Aggregation Level

      For scenario Full VMI, preferably select Detail. For the following scenarios, the value is Not Applicable:

      For the Planning by supplier scenario, set the aggregation level as required in your business environment.
    • Forecast Horizon

      For scenario Full VMI, set the widest possible horizon. For the following scenarios, this field is unavailable because the Send Forecast to Supplier check box is cleared:

      For the Planning by supplier scenario, set the forecast horizon as required in your business environment.

    Confirmed Forecast

    • Use Confirmed Forecast

      For the following scenarios clear this check box, because the customer performs supply planning and the supplier does not use forecasts:

      Otherwise, select this check box.
    • Specify Confirmed Forecast by

      For scenario Full VMI, the preferred value is Message. For the following scenarios, this field is unavailable because the Use Confirmed Forecast check box is cleared:

      For scenario Planning by supplier, select the value required in your business environment.
    • Base Confirmed Forecast on

      For scenario Full VMI, the preferred value is All Forecast. For the following scenarios, this field is unavailable because the Use Confirmed Forecast check box is cleared:

      For the Planning by supplier scenario, select the value required in your business environment.

    Confirmed Supply

    • Use Confirmed Supply

      For scenario Full VMI, select this check box. For the following scenarios, this check box is unavailable because the Send Forecast to Supplier check box is cleared:

      For the Planning by supplier scenario, select or clear this check box as required in your business environment.
    • Confirm Supply Horizon

      For scenario Full VMI, set the widest possible time fence. For the following scenarios, this field is unavailable because the Send Forecast to Supplier check box is cleared:

      For scenario Planning by supplier, set the time fence as required in your business environment.

    Planning

  • The Logistics Terms and Conditions (tctrm1140m000) session allows you to specify how LN updates the administrative warehouse with the inventory levels of the "real" VMI warehouse for the following scenarios:

    Consider the following fields:

    • Method of Inventory Update
    • Receiving Process
    • Delivery Moments
    For more information, refer to To update the administrative warehouse.
  • The Invoicing Terms and Conditions (tctrm1145m000) session allows you to determine how to perform invoicing. Fill the fields as required in your business environment. The Receive Invoice field only applies to the supplier role.
Step 6. Purchase contracts

Terms and conditions are linked to purchase contracts. When you create a purchase contract, in the Purchase Contracts (tdpur3100m000) session:

  1. In the Buy-from Business Partner field, insert the supplier.
  2. In the Terms and Conditions ID field, link the appropriate terms and conditions.