Overview

The procurement via vendor-managed inventory (VMI procurement) includes the process flow related to outsourcing inventory management functions from customer (the considering company) to the vendor.

The vendor solely defines and fills up the customer's warehouse with its goods. The customer, in turn, consumes these goods for its own needs, most often for manufacturing.

In rare cases, depending on the terms of the VMI contract with the vendor, the goods may be sold to a third party. In this case, this scenario is a type of the S2P Consignment procurement scenario.

In the VMI procurement scenario, the vendor regularly monitors VMI stock, material consumption, and replenishment initiation. This scenario implementation requires tight integration with the vendor's information systems as well as regular and consistent information exchange.

Procurement via vendor-managed inventory flowchart

Links to User Guide

• Create and issue purchase orders for VMI procurement
• Define delivery terms
• Carry out internal approval
• Follow up purchase order progress
• Fill up company stock by vendor
• Monitor VMI procurement
• Notify vendors about VMI consumption and process vendor invoices
• Adjust VMI
• Register goods pick-up by partners

Links to Setup Guide

• Items
• Distribution warehouse structure
• Basic warehouse operations
• VMI procurement
• VAT accounting