Vendor Managed Inventory (VMI)

The VMI process is a supply chain management strategy where a supplier manages the inventory at the customer's location. The inventory is owned either by the customer (VMI without consignment) or the supplier (VMI with consignment), but maintained by the supplier.

Note: JD Edwards EnterpriseOne supports both customer and supplier owned vendor managed inventory. Supplier owned vendor managed inventory business process works similar to consigned inventory.

The JD Edwards EnterpriseOne Outbound Inventory Management system allows the supplier and customer to establish an agreement for the VMI process. Instead of the customer reordering when the inventory is exhausted, the supplier is responsible for replenishing and stocking inventory at the customer's location.

The following diagram describes the process flow for customer owned VMI:

The following diagram illustrates the business process flow used by JD Edwards EnterpriseOne for customer owned VMI (VMI with consignment):

The JD Edwards EnterpriseOne Outbound Inventory Management system uses the following process for customer owned VMI:

1. Supplier and customer establish a VMI agreement for shipping and maintaining inventory

2. Supplier sells inventory to customer

3. Supplier ships inventory to customer's location. The customer now owns the inventory

4. Customer reports consumption of goods

5. Supplier replenishes inventory at customer's location based on agreed replenishment method

   The JD Edwards EnterpriseOne Outbound Inventory Management system enables the use of the following replenishment methods:

   • One-to-one replenishment

   • Reorder point replenishment