Vendor Managed Inventory Date Vendor Managed Inventory Subtitle Edit Template

Vendor Managed Inventory INSTRUCTIONS: 1. Insert slides into your company template. 2. Update metrics where noted and delete green boxes when finalized. Leveraging Greater Information Sharing to Reduce Supply Chain Costs, Increase Sales, and Improve Customer Satisfaction Vendor Managed Inventory is the process where the supplier generates orders based on mutually agreed objectives and demand information sent by the customer.

Executive Summary The internet has made sharing data easier, increasing the flow of data within and between organizations Effective supply chains leverage information from as much of the chain as possible Buyers and sellers need to be more closely aligned, creating a seamless buying process Collaboration allows for smoother, more predictable replenishment TrueCommerce Datalliance VMI provides a dramatic ROI: many benefits, low risk, modest investment Distributor Quote

The Problem The distributor and supplier have different sets of information Both spend time and money trying to predict what the other will do DISTRIBUTOR SUPPLIER The problem with traditional replenishment is that the distributor takes the information they have access to and places the order with the supplier. The supplier, in turn, has to produce in anticipation of what the distributor will order. There are employees at the distributor trying to guess how long it will take the supplier to get the new inventory to them and there are employees at the supplier trying to guess how much the distributor is going want. No matter how good these people are, they are operating with incomplete information and occasionally they are going to get it wrong. When that happens, it will be expensive for both organizations. SALES PUTAWAY EVENTS INVENTORY PROMOTION LEADTIME PACKAGE SIZES ITEM NUMBERS

The Solution Communicate between supplier and distributor to create better orders and smoother demand pattern Tighten relationships and align business goals Increase visibility throughout supply chain to enable better resource planning Use cloud-based solution to eliminate hardware costs DISTRIBUTOR SUPPLIER In a perfect world one group of people would be in charge of this business interaction; one group with access to all of the data. Vendor Managed Inventory helps us do this. It does this by increasing our access to information. The first step is to get the product activity data from the distributor to build the orders. By combining our information, the distributor can reallocate resources to more value-added processes and we get greater visibility into the supply chain, improved efficiency, and increased sales.

88% Productivity Reworked Orders The impact on human capital is equally as impressive. We recently compiled insight from a number of our customers across industry groups and found that their planners physically re-work as much as 40% of their non-VMI generated orders. Compare that to their VMI-generated orders that require only 5% manual manipulation. That’s a productivity gain of 88%!

Benefits of Supplier VMI Enter your company name in place of “supplier” and enter your numbers then delete the green bar Benefits of Supplier VMI 31% Out of Stocks 25% Turns Up 24% Sales Increase Since starting our program we have seen . . . Out-of-stocks decreased by 31% on average Turns increased 25% on average And sales grew 24% on average

The Value of Collaboration Adjust this slide for your situation and then remove this green bar. The Value of Collaboration In Stock % Turns Weekly Sales Traditional Replenishment 97% 4.0 $20,742 After 1 Year of VMI 98% 4.6 $26,456 Source: actual data from software vendor Using more data allows for a higher in stock percentage Better picture of supply chain increases turns Greater customer service increases sale By making the ordering process smarter we see that the distributor is in stock with our products more of the time while increasing their turns. These factors combine to make our sales higher at the distributors who are in our VMI program than they were before joining. We want to increase the number of distributors in the program so that we can gain a bigger benefit. [Use the Period Comparison report to generate these numbers for your program.]

Predictable Replenishment Adjust this slide for your situation and then remove this green bar. Predictable Replenishment This data is a placeholder, Datalliance does not have access to pre-VMI orders this should come from your ERP Combining knowledge allows for more consistent order pattern Fewer orders – especially emergency orders – reduces transactional costs More frequent communication leads to higher service levels Traditional Ordering VMI 75 60 Orders per Year Orders per Year

Enter your company name in place of “supplier” and their company name in place of “distributor” then delete this green bar Supplier VMI Process PRODUCT ACTIVITY REVIEW Distributor Supplier The genius behind the TrueCommerce Datalliance VMI process is the simplicity. Every day, the distributor transmits to us their product activity file—in other words, their sales activity that reflects what they started the day with and what was their stocking position at the end of the day. We use that information along with their historical activity to calculate their forecasted demand and generate a suggested order, which is then reviewed by the supplier’s planner. Once the planner works through any exceptions alerted by our system, they launch the order which triggers a purchase order to the supplier and a P.O. acknowledgment to the distributor. P.O. Acknowledgment PURCHASE ORDER

Easy Implementation Distributor Steps * Provide daily product activity Enter your company name in place of “supplier” and their company name in place of “distributor” then delete this green bar Distributor Steps * Provide daily product activity * Receive PO Acknowledgement * Provide sales history Easy Implementation No Additional Hardware Minimal IT involvement No ERP Overhauls Ongoing Supplier & TrueCommerce Datalliance Support

More service and support Summary Improve inventory turnover Better cash flow, improved product mix Increase service levels Wholesaler in-stock to meet demand, reduce stockouts Collaborative supply chain Communication, vendor’s commitment to partner goals More service and support