Full VMI

The customer sends their requirements to the supplier. The requirements are based on the customer's current inventory, outstanding sales orders or sales schedules, and forecasted demand. Usually, the customer sends the total required quantities without specifying the information on which the required quantities are based.

If the customer and the supplier have agreed on replenishment based on minimum/maximum replenishment levels, the customer also sends the required inventory levels.

The supplier checks whether they can fulfill the customer's requirements, and creates a supply plan based on the information from the customer, thus converting their planned supply orders to actual supply orders.

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.

In some full VMI scenarios, the supplier is required to commit themselves to the quantities that they will forward to the customer. In such cases, before the supplier replenishes the customer's stock, the following takes place, which is discussed in Supply planning by customer:

• Supplier commits to supply plan.
• Customer sends call-off.

This is an optional step. Berore the supplier replenishes the customer's stock, the customer approves the supply confirmed by the supplier.

The supplier replenishes the VMI warehouse as required. The supplier issues components for the customer as agreed in the contract, usually based on minimum/maximum replenishment levels.

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 automatic receipt in the customer's administrative warehouse. Other means of communication are also used, in which case the customer manually enters the receipt in their administrative warehouse.

Often, the customer does not need frequent detailed information on the inventory levels, because aggregated receipt information at regular intervals will be sufficient to update the administrative warehouse.

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

The supplier issues stock for the customer as agreed in the contract, usually based on minimum/maximum replenishment levels or call-offs from the customer. The supplier and the customer register the issue in the VMI warehouse in their ERP systems.

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

The supplier records the consumption in their system. This results in an open amount that the customer is to pay. Usually, invoices are created periodically, and sent.

Either the supplier or the customer initiates the billing process. If the supplier triggers the invoicing process, they send a RosettaNet Notify of Invoice message to the customer. Typically, the customer uses a self-billing process to make aggregated payments at fixed intervals, such as once a month. The supplier matches the self-billed invoices with the open amounts. The aggregation level of the invoices is laid down in the contract drawn up between the supplier and the customer.

The supplier matches the customer's payments, based on self-billing or invoices from the supplier, with the open amounts.