1. The Ultimate Buyer – Supplier Collaboration
The Holy Grail of VMI:
The Ultimate Buyer – Supplier Collaboration
Presented by
Move 2 steps
Forward…
START
Copyright 2016 Enhanced Retail Solutions LLC

2. Who is Enhanced Retail Solutions?
We provide a business intelligence platform to manufacturers, retailers and licensors that enable them to uncover opportunities and liabilities that would otherwise go undetected and increase operational efficiencies.
We serve retailers, manufacturers and licensors.
We have a hybrid business model
New York, USA Dallas, USA Cork, Ireland New Delhi, India

3. What is VMI? Logistics Management
Supply
Logistics
Inventory
Vendor Managed Inventory is a collaborative business model where the retailer provides product activity (such as an EDI 852) to a vendor to compare against model stock for each store location.
Once a vendor has this information, they integrate it with their wholesale ownership to determine production needs, what replenishment is needed by store and creating reverse PO’s.
OR, increasing the accuracy of having the right product in the right stores at the right time.
Going to talk through:
What are the benefits of VMI
What are the responsibilities
The Process
Short & Long Term Objectives
Required Resources
Why do we call it the holy grail?

4. What are the Benefits VMI?
More Consistent Flow of Product
Improved In-Stock
Increased Sales and Profit
Quicker Response Time to Trends
More Accurate Forecasting
Additional Set of Eyes and Resources
Greater Visibility to Stock Position
Enhanced Production Planning
Less Risk for Buyer and Supplier
Supplier can be laser focused on their piece of the pie, rather than Buyer giving limited attention to each of their suppliers.
More Accurate Forecasting- Build from ground up so more reliable
Greater visibility- combined view of store and wholesale inventory prevents surprises.
Are there liabilities? Yes, if buyer constantly puts constraints and doesn’t accept orders based on need, no reason to do it.
Extra effort should provide a reasonable payoff.

5. VMI Responsibilities Supplier Buyer Manage Wholesale Inventory
Manage Receipt Flow
Calculates Needs to SKU by Store
Creates Reverse PO & Transmits to Retailer
Compares Estimates with Buyer’s
Buyer
Manages Open to Buy
Estimates Weekly Sales by Item
Communicates Changes in SKU/Stores
Communicates Promotional Plans, Etc.
Compares Estimates with Supplier’s
Collaboration

6. Lost Data: Go back 3 Spaces
VMI:
THE GAME
START
Fixed Store Outs
Production Delay
VMI
PROMOTION!
Model Change
GO BACK TO START!
Improved In-Stock!
CREATE YOUR TEXT ADD INS HERE
Sales Gain
Ran out of inventory
The game highlights the process of VMI
Open to Buy Constraint
Lost Data: Go back 3 Spaces
10% Sales Gain !

7. Identify item candidates for VMI Identify store candidates for VMI
VMI Set Up
Identify item candidates for VMI
Identify store candidates for VMI
START HERE

8. Determine Replenishment Model
VMI Set Up
Determine Replenishment Model
Model stock or based on ROS or both? Depends on retailer philosophy
WOS, Min, Max, Pack Size, ship rules (wait for $ per carton).
Define Parameters
Define Review Periods

9. Determine Constraints & Push Scenarios
VMI Set Up
Determine Constraints & Push Scenarios
What does reporting look like?
How quickly can you make changes?
What does on hand include? In-transit, on order, etc. Inventory buckets must be defined
What are the stop points?
Define Data Sets
Develop VMI Roadmap

10. Weekly Cycle System Calculates Raw Needs by SKU/Store
Supplier receives POS Data
POS = sales and inventory (in-transit, on order)
Wholesale= available to ship, future production
What’s used long term vs. short term
Calculations- Blending of Long and Short term averages to calculate needs? Need speed here.
Supplier integrates Wholesale Inventory

11. Weekly Cycle System Applies Rules & Constraints
Round
OTB
PUSH
GO!
System Applies Rules & Constraints
POS = sales and inventory (in-transit, on order)
Wholesale= available to ship, future production
What’s used long term vs. short term
Supplier Views System Recommendations
Supplier Makes any Adjustments

12. Approve or Adjust Again
Weekly Cycle
POS = sales and inventory (in-transit, on order)
Wholesale= available to ship, future production
What’s used long term vs. short term
System Recalculates
Final Order Review
Approve or Adjust Again

13. Retailer Confirms Order
Weekly Cycle
Retailer Confirms Order
Data Extract Created
EDI Order Transmitted to Retailer

14. VMI Replenishment Workflow
Start Here
Weekly POS Feed (Store Sales & Inventory)
Daily Wholesale Inventory Feed from ERP
System Calculates Replenishment Quantity by SKU/Store
User Approves or Applies New Scenarios, System Recalculates
Data Extract Created
EDI or other PO transmission protocol enacted to Retailer
Database
EDI VAN
Our model is built to be automated, yet we customize a portal for customer manipulations.
Copyright 2016 Enhanced Retail Solutions LLC

15. What is Required?
POS Feed (usually EDI 852) with Sales and Inventory Fields
Ability to Integrate Wholesale Inventory
Retail Analytic Platform
Inventory Management/Forecast System
Visibility to Past, Present and Future
Door Level Needs Calculator
Know What Questions to Ask
Speed and Flexibility
Systems- not excel- cloud based is optimal for sharing purposes
Integration is key. Buyer & Supplier fields merged together in one place.
Speed v Flexibility- use to be a tradeoff, not anymore with newer systems. Ask provider what is speed on calculating a finite amount of SKU-Store combinations.
Anyone who says overnight- walk away from.

16. Short & Long Term Objectives
Wholesale Needs
Item Needs
Store Needs
Planning Time
To determine objectives you have to break it down into the key components of inventory needs.
Top is wholesale- how much raw materials are required to cover a period of time
Breakdown by week and month and use to manufacture based on lead times
Have goods available once store needs are calculated each week
Quantity

17. Long Term Wholesale Needs Production Plan Receipt Flow
Long term needs. How do short term trends effect it?
If long lead times may not have a lot of flexibility to move product around so have to be right.
Tell supplier what orders to place with the factory.
Parameters such as lead time, weeks of supply model.
Different product categories have different rules. Apparel vs. accessories vs. toys vs electronics, etc
Production Plan
Receipt
Flow
Long Term

18. Item “Ladder” Plan Make adjustments to receipt flow
Create a plan up front which includes buyer’s promotions, seasonality, inventory buildup, etc.
Track each week to see how actuals compare to plan.
Make adjustment and get a sense of where you are going to end up.
Make adjustments to receipt flow
How am I doing against plan?
Mid Term

19. Replenishment Calculator
Door level replenishment- this is the heart of VMI. The last stop in the chain- where does the inventory go?
Need versatile tool. Not a perfect science because sometimes the rules change.
90% auto pilot?
Short Term
Visibility
Break it Down

20. Replenishment Calculator
Model stock or based on ROS or both? Depends on retailer philosophy
WOS, Min, Max, Pack Size, ship rules (wait for $ per carton).
Does it fit within OTB?
Short Term
Do the Math

21. Replenishment Calculator
User changes parameters and system recalculates needs.
Selected: $50,000 OTB constraint, Remove Bottom stores
Click Run Update
Note the Current Replen Order Units and Dollars have changed.
BEFORE: AFTER:
Model stock or based on ROS or both? Depends on retailer philosophy
WOS, Min, Max, Pack Size, ship rules (wait for $ per carton).
Short Term
Scenarios
Priorities

22. Replenishment Calculator
BEFORE AFTER:
Place your bets
Top Down or Bottoms Up?
Generate
Order
Global Changes

23. Visibility Up & Down & Side to Side
View by Group
View by Style
View by SKU/UPC
View by Store

24. Visibility Up & Down & Side to Side
Shows WOS by Group, Ranges are Color Coded Shows where the $ are allocated by Group
Exception based reporting is essential to locating opportunities and liabilities
Shows Only Items with WOS < Shows Only Items with WOS >20

25. Thank You! Questions? Telephone: 212.938.1991
Jim Lewis
Founder & CEO
David Matsil
President, Business Development & Marketing
Telephone:
www.
Enhancedretailsolutions.com