B2B Integration : A Practical Guide to Collaborative E-commerce

14.7.1. Vendor Managed Inventory (VMI)
Supply Chain Management (SCM) 431
VMI is a framework that streamlines the approach to inventory and order
fulfillment leading to minimum level of inventory and reduced operational
costs. In this system, the responsibility of managing and replenishing
inventory is shifted from retailers to the suppliers. In a VMI system,
vendors keep track of the number of products supplied to distributors
and retail outlets. It keeps them abreast of the requirements of distributors
and stocks at the counter outlets enabling them to replenish them timely.
14.7.2. Just-in-Time (JIT)
JIT is defined as an integrated set of multiple activities with a view
to achieving high-volume and best quality production with minimum
inventory levels. It aims at reducing inventories by collaborating and
coordinating with suppliers of materials for delivery just before their
use, thereby reducing inventory-carrying costs.
The JIT model works on the concept that unless actually needed,
nothing will be supplied. In other words, raw materials and components
reach the workstations just-in-time and are put through the manufacturing
process immediately thereafter. It takes into cognicance changes in
supply and demand portfolios.
Since JIT is based on almost real-time delivery of raw materials, it is
subject to great reliance of the company on suppliers, transportation and
delivery of raw materials and components at the specified destination,
on tight schedules. Any break in the link anywhere may cause disruption
and bring the production to a standstill, paralyzing the entire chain from
manufacture to supply.
Companies are now switching to Internet-based technologies to
establish an electronic dialogue with their suppliers, making the JIT
ordering and delivery process faster and more flexible.
14.7.3. Collaborative Planning, Forecasting and
Replenishment (CPFR)
CPFR is a standards-based, collaborative, e-commerce initiative in the
retail and consumer goods industry. CPFR aims to improve partnership