Life at the office is full of responsibilities. You have meetings to attend, deadlines to meet, clients to contact — the list goes on. The last thing you need to worry about is inventory. That’s where the VMI business model can help. What is VMI and what can it do for your organization? The 1 EDI Source experts take a closer look in the sections below.
You’ve probably heard the acronym “VMI”, but what does it mean? VMI stands for Vendor Managed Inventory. This business model occurs in two steps:
This process lessens the chances of the buyer running out of supply of the product. It also reduces inventory in the supply chain.
Thanks to vendor managed inventory, your business can thrive in a number of ways. Among endless advantages, some of the key benefits you can experience include:
When a buyer and supplier decide to use vendor managed inventory, they agree to follow a set policy for:
A useful tool like EDI acts as a platform to monitor activity with measurements against those policy standards. By adjusting the demand and supply gaps, EDI helps make sure the buyer has the required level of inventory. It also informs the supplier and buyer when measurements fall outside acceptable ranges or unusual issues occur like missing or incomplete data. The table below shows some of the EDI codes most frequently used with vendor managed inventory.
| EDI Code | What it Means | Purpose |
|---|---|---|
| EDI 850 | Purchase Order | Used to place an order |
| EDI 852 | Product Activity Data | Provides trading partners with product SKU activity data |
| EDI 856 | Advanced Shipping Notice Specifications | Informs customers of an incoming order |
| EDI 860 | Order Change Request | Requests an update to the details of the original purchase order |
| EDI 997 | Functional Acknowledgement | Confirms receipt of the purchase order |
If you’re ready to perfect your supply chain process with vendor managed inventory, 1 EDI Source is here to help. Our professional services team can assist you with meeting the requirements of your trading partners in the most effective manner. We’re here to help you create and adopt an approach that addresses your needs for security, communications protocols, integration issues, transaction formats and more. To learn more, contact 1 EDI Source today!
Discover even more about vendor managed inventory in our Resource Center where you will find useful articles, downloadable guides and more!
With the help of vendor managed inventory backed by EDI, a supplier-buyer relationship can thrive. Discover more about this business process in these 1 EDI Source resources.
