Setting Up Vendor Managed Inventory

To set up VMI replenishment at the business unit level, use the BU Replenishment (IN_VMI_REPLN_BU) component. To set up VMI items at the business unit level, use the BU Item Replenishment (IN_VMI_RPLN_BUITEM) component.

To set up ship to information, use the Ship-To/Item Replenish (IN_VMI_RPLN_SHIPTO) component.

When setting up your system to manage stock at a customer location, you must:

  1. Set up security for the VMI manager.

  2. Define items by SetID.

  3. Create a VMI business unit.

  4. Set up Ship To VMI options for the customer.

  5. Set up Sold To options for the customer.

  6. Define items for a VMI business unit.

  7. Create storage locations for the VMI business unit.

  8. Setup VMI Replenishment parameters.

Setting Up VMI Replenishment Parameters

VMI replenishment parameters can be set up at these levels:

  • The customer ship-to level.

  • The VMI business unit level.

  • The VMI business unit and item combination level.

  • The VMI business unit, item, and customer ship to level.

Replenishment parameters default from different places. They may be defined at the customer ship-to and item combination level. If they are not, this table illustrates the manner in which they will default:

Replenishment Attribute

Primary Default Source

Second Default Source

Third Default Source

Fourth Default Source

Replenish Class

VMI Ship-To Item Attributes

VMI BU Item Replenishment

Reorder Quantity Option

VMI Ship-To Item Attributes

Ship-To Customer

VMI BU Item Replenishment

VMI BU Replenishment

Stock-in Rate

VMI Ship-To Item Attributes

Ship-To Customer

VMI BU Item Replenishment

VMI BU Replenishment

Replenish Calculation Period

VMI Ship-To Item Attributes

Ship-To Customer

VMI BU Item Replenishment

VMI BU Replenishment

Reorder Point Range Checking

VMI Ship-To Item Attributes

Ship-To Customer

VMI BU Replenishment

Reorder Point Percent

VMI Ship-To Item Attributes

Ship-To Customer

VMI BU Replenishment

Reorder Point

VMI Ship-To Item Attributes

VMI BU Item Replenishment

Maximum Quantity

VMI Ship-To Item Attributes

VMI BU Item Replenishment

Replenish Lead Time

VMI Ship-To Item Attributes

VMI BU Item Replenishment

Reorder Quantity

VMI Ship-To Item Attributes

VMI BU Item Replenishment

Economic Order Quantity

VMI Ship-To Item Attributes

VMI BU Item Replenishment

Source Business Unit

VMI Ship-To Item Attributes

Ship-To Customer

Product ID

VMI Ship-To Item Attributes

VMI BU Item Replenishment

First record found in the PROD_ITEM table for the inventory business unit SetID

Unit or Measure

VMI Ship-To Item Attributes

VMI BU Item Replenishment

Default UOM for the product in the PROD_UOM table

Item Standard UOM

Page Name

Definition Name

Usage

User Profiles - Roles Page

USER_ROLES

Assign the VMI Manager role to the user ID, which enables the user to access VMI components.

PeopleTools : Security Administration

Define Item-General: Common Page

ITEM_DEFIN

Define items at the SetID level.

Business Unit Definition Page

BUS_UNIT_INV1

Define a VMI business unit.

Ship To - VMI Options Page

CUST_SHIPTO_OPT2

Define VMI options for the ship to customer.

Sold To Options Page

CUST_SOLDTO_OPT

Define VMI options for the sold to customer.

Storage Areas Page

STORAGE_AREA_INV

Used to create storage areas for a VMI business unit.

Material Storage Locations Page

STOR_LOCATIONS_INV

Used to create storage locations for a VMI business unit, and associate the customer to the location.

Define Business Unit Item-General: Common Page

GEN_ATTRIB_INV

Add a cost element and define VMI customers for the VMI business unit and item combination.

Material Storage Locations - VMI Ship To Page

IN_LOC_SHIP_TO_SP

Used to define customer ship to locations for the business unit.

BU Replenishment Page

IN_VMI_RPLN_BU

Used to define replenishment parameters for a VMI business unit.

BU Item Replenishment Page

IN_VMI_RPLN_BUITEM

Used to define replenishment parameters for a VMI business unit and item combination.

Ship To / Item Replenishment Page

IN_VMI_RPLN_SHIPTO

Used to define replenishment parameters for a VMI business unit, item, and customer ship to combination.

Use the User Profiles - Roles page (USER_ROLES) to used to assign the VMI Manager role to the user ID, which enables the user to access VMI components.

Navigation:

PeopleTools > Security > User Profiles > User Profiles. Select the Roles Tab.

Use the Define Item-General: Common page to define items for VMI usage.

Navigation:

Items > Define Items and Attributes > Define Item

In the Item Type group box, make sure that the Non-Owned Item and the Consigned Purchase check boxes are not selected.

Use the Business Unit Definition page (BUS_UNIT_INV1) to create a VMI business unit that represents your customer site.

Navigation:

Set Up Financials/Supply Chain > Business Unit Related > Inventory > Inventory Definition

Select the VMI Stock check box to indicate that this business unit is supplier managed.

Note: The VMI business unit must have the same general ledger business unit as the supplying inventory business unit.

Use the Ship To - VMI Options page (CUST_SHIPTO_OPT2) to define VMI options for the ship to customer.

Use the Customer Ship To Options page to indicate that the customer accepts partial scheduled and partial orders so that the VMI manager can examine back ordered quantities.

To indicate that a customer ID is a VMI managed location, use the Customer Information (CUSTOMER_GENERAL) component. Use the Customer Ship To (CUSTOMER_SHIPTO_CI) component interface to load data into the tables for this component.

Navigation:

Customers > Customer Information > Create Customer Information. Select the Ship To Options tab, then select the VMI Options link.

This example illustrates the fields and controls on the Customer Ship To - VMI Options page. You can find definitions for the fields and controls later on this page.

 Customer Ship To - VMI Options page

VMI Options

Field or Control

Description

VMI Enabled Customer

Select to indicate that this customer ship to ID stocks consigned items and is used for VMI.

VMI Manager

Select the employee who is responsible for approving and overseeing orders generated for the VMI customer. This employee must have a role of VMI Manager.

Goods Consigned at Customer

Select to indicate that items shipped to this customer are not owned by the customer and are not paid for until they are consumed. This customer is not billed for items when the items are shipped. If selected, the four customer item tracking options; lot control, serial control, container control, and staged date control are automatically selected when you save the page. If not selected, the four customer item tracking options are not affected. This option also determines the Non-Owned option on the Material Storage Locations page.

Customer Order Defaults

Field or Control

Description

Source Business Unit

Select the inventory business unit that is used when the VMI Replenishment process generates sales orders. This inventory business unit indicates the typical ship from location.

Customer PO Number

Enter the customer purchase order ID that is included on the sales order acknowledgement.

Customer Item Tracking

Select to indicate that lot, serial, container, and staged date information is maintained at the customer site. If selected, all transactions received from the customer will contain the item detail. If not selected, transactions received from the customer will not contain the item detail, and the items are depleted by using FIFO logic.

The options can not be updated if there is inventory on-hand or in-transit to the ship-to customer.

If any of the four customer item tracking options are selected, they are not grayed-out when you save. Instead, they are grayed-out the next time you access the page.

Replenishment Parameters

Indicate specific replenishment parameters that are used to calculate replenishment requests for VMI.

See Defining Replenishment Options.

Use the Sold To Options page (CUST_SOLDTO_OPT) to define VMI options for the sold to customer.

To set up customer sold to VMI options, use the Customer Information (CUSTOMER_GENERAL) component. Use the Customer Sold To (CUSTOMER_SOLDTO_CI) component interface to load data into the tables for this component.

Navigation:

Customers > Customer Information > Create Customer Information. Select the Sold To Options tab.

This example illustrates the fields and controls on the Sold To Options page. You can find definitions for the fields and controls later on this page.

 Sold To Options page

Field or Control

Description

VMI Order Consolidation

Select the option that determines how sales order requests, that are generated during the VMI Replenishment process, is grouped.

None: Select to instruct the VMI Replenishment process to generate a separate sales order for every replenishment request.

Ship To Customer: Select to instruct the VMI Replenishment process to combine all replenishment requests for the same ship to customer on the same sales order or material stock request.

Sold To Customer: Select to instruct the VMI Replenishment process to combine replenishment requests for the same sold to customer on the same sales order. This applies only to sales orders for non-consigned customers.

Receipt Verification

Select to indicate that the customer wishes to verify the receipt of items. If selected, the customer acknowledges the receipt of goods at their site. Shipments will appear as being in-transit until the receipt verification is received. If not selected, the customer does not acknowledge receipt, and the auto-putaway process is used to update on hand quantities for the VMI business unit.

Order Verification

Select to indicate that all sales orders created for this customer go on VMI hold. This provides the VMI manager to review the order before releasing it from hold.

Use the Define Business Unit Item-General: Common page (GEN_ATTRIB_INV) to define items for a VMI business unit.

Navigation:

Items > Define Items and Attributes > Define Business Unit Item.

Add a cost element. The Non-Owned Item and Consigned Purchase options are not enabled.

Use the Material Storage Locations - VMI Ship To page (IN_LOC_SHIP_TO_SP) to used to define customer ship to locations for the business unit.

Navigation:

Inventory > Maintain Storage Locations > Material Storage Locations. Select the VMI Ship To link.

This example illustrates the fields and controls on the Material Storage Locations - VMI Ship To page. You can find definitions for the fields and controls later on this page.

 Material Storage Locations - VMI Ship To page

Use the Material Storage Locations page to create storage location for the VMI business unit. Then use the Material Storage Locations - VMI Ship To page, to enter the VMI Order Management business unit, the VMI Ship To Customer identification code, the VMI Sold to Customer identification code, the Reorder Quantity Option, and the Desired Stock-In Probability.

Multiple customer ship to locations can be managed in one VMI business unit because the customer is associated to a material storage location. Therefore you can set up multiple MSLs within a VMI business unit; each MSL representing a customer site. If the customer site stores consigned and non-consigned items, you will need to create two storage locations and two customer ship-to values.

On the Material Storage Locations page, the Nettable, Non-Owned and WIP fields are not enabled. The Non-Owned field appears by default from the Goods Consigned at Customer option on the Customer: Ship To-VMI Options page.

Use the Customer Ship To - VMI Options page to set up VMI replenishment parameters for a customer ship-to.

Navigation:

Customers > Customer Information > Create Customer Information. Select the Ship To Options tab, then select the VMI Options link

See Ship To - VMI Options Page.

Use the BU Replenishment page (IN_VMI_RPLN_BU) to used to define replenishment parameters for a VMI business unit.

Navigation:

Inventory > Vendor Managed Inventory > Setup VMI Replenishment > BU Replenishment

This example illustrates the fields and controls on the BU Replenishment page. You can find definitions for the fields and controls later on this page.

 BU Replenishment page

Field or Control

Description

Reorder Quantity Option

Select how the VMI items are replenished for the VMI business unit. Options are EOQ, Min/Max, and Static Reorder Qty.

See Defining Replenishment Options.

Use the BU Item Replenishment page (IN_VMI_RPLN_BUITEM) to used to define replenishment parameters for a VMI business unit and item combination.

Navigation:

Inventory > Vendor Managed Inventory > Setup VMI Replenishment > BU Item Replenishment

This example illustrates the fields and controls on the BU Item Replenishment page. You can find definitions for the fields and controls later on this page.

 BU Item Replenishment page

All values on this page override setup on the BU Replenishment page.

Field or Control

Description

Replenish Lead (Days)

This value represents the average number of days from the placement of a sales order or an MSR, to the receipt of the stock.

See Defining Replenishment Options.

Use the Ship-To/Item Replenishment page (IN_VMI_RPLN_SHIPTO) to used to define replenishment parameters for a VMI business unit, item, and customer ship to combination.

Navigation:

Inventory > Vendor Managed Inventory > Setup VMI Replenishment > Ship-To Item VMI Replen

This example illustrates the fields and controls on the Ship-To/Item Replenishment page. You can find definitions for the fields and controls later on this page.

 Ship-To/Item Replenishment page

Field or Control

Description

Replenish Lead (Days)

This value represents the average number of days from the placement of a sales order or an MSR, to the receipt of the stock. This default value comes from the BU Item Replenishment page.

The VMI Order Management business unit determines the SetID that is used when selecting the Ship To Customer.

The Source Business Unit appears by default from the Customer Ship To setup page.

All values on this page, override setup on the BU Replenishment page and the BU Item Replenishment page.