VMI supplier forecast - 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 supplier 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.
  • If Enterprise Planning must allocate inventory based on forecasted demand from the customer, but replenishment is based on call-off, select the Demand Pegging check box.
  • Clear the Ownership Internal check box.
  • Select the Ownership External check box if the ownership of the goods is consigned.
  • Select the VMI (supplier side) check box.
  • Preferably clear the Use Confirmation (Sales) check box, unless the supplier performs inventory planning and the items involved are crucial to the customer's production process, as can be the case in scenario Planning by supplier.
Step 2. Clusters

In the Planning Clusters (tcemm1135m000) session, consider the following fields:

  • External
    Select this check box if the supplier performs supply planning such as in the Full VMI, Planning by supplier, and Warehouse management by customer scenarios. Otherwise, we recommend to clear this check box.
  • Sold-to Business Partner
    If the cluster is external (check box External is selected) insert the customer.
  • Ship-to Business Partner
    Insert the appropriate ship-to business partner if the customer has various ship-to business partners.
Step 3. Warehouses

In the Warehouses (whwmd2500m000) session, set up the VMI warehouse. In the Consignment, Warehouse management by customer, and Planning by supplier scenarios, this is an administrative warehouse. Consider the following fields and check boxes:

  • Planning Cluster
    If the supplier performs supply planning, insert the external cluster defined in the Planning Clusters (tcemm1135m000) session. This typically applies to the Full VMI, Planning by supplier, and Warehouse management by customer scenarios.
  • Include in Enterprise Planning
    Preferably select this check box if the supplier performs supply planning for the VMI warehouse.
  • Inventory Management

    Preferably select this check box if the supplier performs inventory management, as in scenarios:

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

    If you cleared the Inventory Management check box, select the business partner (customer) who must carry out inventory management. This applies to scenarios:

  • External Site
    Preferably select Yes, because being the supplier, the VMI warehouse belongs to the customer.
  • Business Partner
    If you selected Yes in the External Site field, in the current field (located directly below the External Site field) enter the business partner who represents the customer.
  • Buy-from and Ship-from
    Leave these fields (located in the External Site group box) empty.
  • Sold-to
    If you selected Yes in the External Site field, in the current field (located in the External Site group box), enter the business partner who represents the customer.
  • Ship-to
    If you selected Yes for External Site and the customer has various ship-to business partners for whom the supplier performs supply planning, insert the appropriate ship-to business partner.
Step 4. Item

To set up items:

  • In the Items (tcibd0501m000) session, preferably select Planned in the Order System field for scenarios in which the supplier performs supply planning:

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

    • Plan Item
      In the cluster segment (outer left) of this field, select the external cluster defined in Clusters if the supplier performs supply planning.
    • Supply Source
      Preferably select Distribution if the supplier performs supply planning. For direct deliveries, value Item Source is required.
    • Ordering Warehouse
      For all scenarios, enter the VMI warehouse specified in Warehouses.
    • Master Plan
      It is not required 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 (whwmd4600m000) session, you can specify whether and how the ownership of inventory is registered.

    If the customer performs warehouse management, so the VMI warehouse is an administrative warehouse in the supplier's ERP system, ownership registration on warehouse level is 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. For information about the ownership registration levels relevant to each scenario, see above.

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 Sales.

    • For search level 1, the recommended attribute for Search Attribute 1 is Item Group, and for Search Attribute 2 it is Ship-to Business Partner. 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 Ship-to Business Partner. 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.

    • For most scenarios, preferably select the following check boxes:

      • Planning
      • Order
      • Logistics
      • Invoicing
      • Demand Pegging
      For example, setting up planning terms and conditions might not be necessary for scenario Consignment. 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, select Pay on Use.
  • In the Planning Terms and Conditions (tctrm1135m000) session, consider the following fields:

    General

    Confirmed Forecast

    • Use Confirmed Forecast
      Select this check box if the customer is to specify which part of the forecast is confirmed. This field is unavailable if the Forecast received from Customer check box is cleared.
    • Specify Confirmed Forecast by

      For scenario Full VMI, select 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.

    Confirmed Supply

    • Confirm Supply
      Preferably select this check box if the supplier is to send a confirmation of the forecast to the customer.
    • Confirmed Supply Based On
      Preferably select Confirmed Forecast if you must define the type of demand on which a supplier's confirmed supply is based.
    • Confirm Supply Horizon
      For scenario Full VMI, preferably set the widest possible time fence. Otherwise, set the time fence as required in your business environment.

    Planning

    • Replenishment Based On
      For the Full VMI scenario, preferably select Confirmed Supply. Otherwise, select the value required in your business environment.

  • 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. This applies to the following scenarios:

    Consider the following fields:

    • Method of Inventory Update
    • Receiving Process
    • Delivery Moments
    For further information on these fields, see To update the administrative warehouse.
  • The Invoicing Terms and Conditions (tctrm1145m000) session allows you to determine how to perform invoicing. You can fill the fields as required by your organization. For further information on these fields, see the online Help of the Terms and Conditions module of Common.
Step 6. Sales contracts

Terms and conditions are linked to sales contracts. When you create a sales contract, in the Sales Contracts (tdsls3500m000) session:

  1. In the Sold-to Business Partner field, insert the customer.
  2. In the Terms and Conditions ID field, link the appropriate terms and conditions.