Logistics Case Study: Introducing Co-Managed Inventory at Guinness GB
Guinness was seeking lead time reduction of their inventory to reduce costs and therefore maximize profits. Keeping high inventory levels of stout, draft and other types of beers would allow them to have rapid responses when the product would be needed, by keeping stock available. At that time, CMI and VMI were two of the possible options to achieve this objective, derived from ECR initiatives. ECR or Efficient Consumer Response is a strategy initiated to remove unnecessary cost from the supply chain and make it more responsive to consumer demand.
The difference between CMI and VMI is basically that:
Vendor Managed Inventory is when a supplier maintains the replenishment system, all sales and inventory information must be transmitted by the buyer to the supplier as often as the replenishment system is executed. This information is used by the supplier's replenishment system as historical data for future requirement calculations and adjustments to the next production cycle.
The requirement quantities generated by the supplier's CRP system are available to improve capacity planning for current and future production. When a firm order is generated by the supplier for the required quantities, this order information is transmitted to the buyer for him to update his order processing system.
CMI or Co-managed inventory is when the replenishment system is co-managed, the sales and inventory information must be also be given by the buyer to the supplier as often as the replenishment system is executed. Like in VMI, this information is used by the supplier's replenishment system as historical data for calculation of future requirements and adjustments to the next production cycle.
In Co-Managed Inventory (CMI), although the order is generated by the supplier, it is revised and confirmed by the buyer. The fundamental difference between VMI...