enrich IT

Experts in extending Oracle e-Business Suite

Vendor Managed Inventory (VMI)

Presenter: Arul Murugan, CPIM

1/16/2004

VMI

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Agenda
Overview about VMI Pre-requisites for Oracle VMI Oracle Architecture for VMI Collaborative Planning Configurations for VMI VMI Benefits Option 1: Standard VMI Option 2: VMI with consignment model Option 3: Track Vendor Inventory without Oracle VMI Q&A

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Overview on VMI
Vendor Managed Inventory (VMI) is a procurement and planning practice in which a company delegates key inventory management functions to one or more of its suppliers. Under this arrangement the supplier determines the items, quantities, and delivery schedules on behalf of the customer based on information it receives from the customers inventory and procurement systems. Using VMI, manufacturers and distributors can anticipate customer needs and provide inventory more proactively than is possible using traditional procurement methods This Presentation will address how VMI can be accomplished by using a single, well-integrated suite of applications ( Oracle )

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Pre-Requisites for VMI
Oracle Applications 11.5.8 or Oracle Applications 11i prior to 11.5.8 with Family pack H for the following modules Oracle Inventory Oracle Purchasing Oracle Planning (APS) Collaborative planning is installed and Configured iSupplier Portal integrated with Collaborative planning for Supplier Collaboration (Optional) For VMI with Consignment model following modules need to be at 11.5.9
Oracle Inventory Oracle Purchasing Oracle Payables Cost Management Warehouse Management

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Oracle Architecture for VMI
Oracle OLTP Instance Existing modules need to be upgraded by applying the lattest 11.5.8 rollup patch

Oracle Purchasing

Oracle Inventory

Oracle Order Management

Need to make configuration changes to enable VMI for selective items Collection parameters need to be changed to include user / Company association

Data Collection Oracle APS Instance

ASCP
Collectes data and Plans for all the items Publish On-hand, Forecast, PO and other data for VMI Collaborative planning is a new module within APS Suite that need to be configured for VMI

Collaborative Planning / Supplier Collaboration

Run VMI Replenishment engine iSupplier portal need to be installed and configured. It is integrated with Collaborative planning and purchasing module

Publish On-hand, Forecast, PO

Load Vendor On-hand as ASN

Supplier Integration

iSupplier Portal
Vendor uses portal to Acknowledge PO, Update Promise date, View On-hand, Forecast, Replenish Inventory, View receipts , invoices, payments and other information on-line

e-Commerce Gateway Send On-hand / Forecast / PO to Vendor Receive ASN, PO acknowledgement and changes from Vendor Large suppliers can integrate to your Oracle system by sending EDI / XML file for both inbound and outbound transactions

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Collaborative Planning
Customers Manufacturer / Distributor Suppliers

Customer Portal
Customer Forecat, Purchase Orders Revised Forecast, Change Orders
Customer's ERP / Legacy System

Supplier Portal
Customer Forecat, Purchase Orders Revised Forecast, Change Orders Exceptions
Supplier's ERP / Legacy System

Exceptions Advanced Shipment notice

Oracle Advanced Planning Engine

Advanced Shipment notice

Supply Commits

Supply Commits

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VMI Configuration Steps
Enable VMI at the ASL level (Item Vendor Combination) Enter threshold values and other VMI related parameters at ASL level Setup VMI related profile options Run initial Data collection with complete refresh including usercompany association Run VMI Replenishment Engine in Collaborative planning after data collection Configure Planner Workbench to handle VMI exceptions by Planners Optionally Configure to do Auto Replenishment by checking Allow Automatic checkbox at ASL Configure isupplier portal to be linked to Collaborative planning to effectively use Supplier Collaboration

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VMI Benefits
Benefit for the supplier:  The ability to access customer on-hand quantity information, forecast information, minimum and maximum inventory thresholds, in-transit inventory quantities and expected receipt dates in order to determine when to ship goods  The ability to manually execute an approved purchase requisition or blanket release on the customer system and to track the status of the order through receipt, storage, and consumption by the customer  The ability to automate replenishment proposals Benefit for the customer:  The ability to differentiate between goods that must be replenished by a supplier from those which are internally planned and replenished  The ability to consume VMI materials in Work-In-Process or to explicitly take responsibility for planning from the supplier as needed  The ability to better estimate suppliers production schedules based on anticipated demand from the customer.
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Option 1: Oracle VMI
VMI Process Flow
View On-hand Balances Is Available Qty < Min Threshold Monitor Onhand Status Monitor No

Yes Run VMI Replenishment Engine Vendor Authorised to release ? Vendor / Buyer can release planned order into Requistion Only Buyer can release planned orders into Requistion

Yes

Replenish

Create PO from the requistion Oracle tracks Vendor Inventory seperately from your invetory by planning Organizations Receive Ithe goods in your inventory

No

Receive Goods

Vendor Ships the inventory

Vendors sends ASN throguh EDI

Interface Vendor ASN into Oracle ( In-Transit )

Fullfill Customer Demand

Pick the material for a Sales Order

OwnerShip transfers from Vendor to your Organization

Fullfill the Sales order

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Option2: Oracle VMI with Consignment
VMI Process Flow
View On-hand Balances Is Available Qty < Min Threshold Monitor Onhand Status Monitor No

Yes Run VMI Replenishment Engine Vendor Authorised to release ? Vendor / Buyer can release planned order into Requistion Only Buyer can release planned orders into Requistion

Yes

Vendor Replenishment

No

Create PO from the requistion

Receive Goods

Vendor Ships the inventory

Vendors sends ASN throguh EDI

Interface Vendor ASN into Oracle ( In-Transit )

Receive Ithe goods in your inventory

System will not generate any accounting transactions. On-hand inventory will not be in our books. On-hand inventory will be tracked by Vendor No accrual takes place ** Requires 11.5.9 Upgrade

Fullfill Customer Demand

Pick the material for a Sales Order

System relives the invenotory from Vendor and book into your books (All accounting transactions take place at this point of time Only now accrual takes place and you are liable to pay vendor)

Fullfill the Sales order (Can configure to take ownership at point of sale)

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Option 3: VMI for version prior to 11.5.8
For Clients using Oracle applications version prior to 11.5.8 can implement VMI in one of the following ways by extending your Oracle e-business suite to support VMI 1. Create a Separate inventory Organization to stock and track Vendor inventory 2. Use ASN to track Vendor Inventory. As long as the inventory is managed by Vendor it will be considered as ASN In-Transit and when you want to consume the material receive the inventory against ASN into your inventory 3. Load vendor on-hand as vendor Capacity for each item vendor combination in ASL. Optionally load on-hand as MPS entries as well with ATP option checked and production option unchecked. This will enable to promise customer orders against vendor inventory when ATP is performed in OM
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Profile

enrich IT:
enrich IT specializes in extending your Oracle E-Business suite with strong expertise in base application. Our unique model allows low cost implementation of quick hit projects for a fixed fee. Our normal implementation time frame is 3 to 8 Weeks and we promise on-time delivery. We partner with you in developing Multi Generation Plan and executing in Quarterly / Monthly Releases

Arul Murugan:
Arul Murugan, CPIM is a Managing Principal Consultant with enrich IT and is specializing in the implementation and upgrade of Oracle e-business suite. He has been a functional lead consultant / architect for about 8 years in implementing Oracle for manufacturing and service industry in the areas of Supply chain planning, Manufacturing, Distribution and CRM. Arul has done several successful full life cycle Oracle implementations and also extended the Oracle e-business suite for lot of clients after Go-Live.

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Contact Us

Arul Murugan, CPIM enrich IT

Managing Principal Consultant 404-723-1405 Arul@enrichIT.com

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