Design and implementation of a solution for Vendor Managed Inventory

Abstract

Vendor Managed Inventory (VMI) is a tool selected by Schneider Electric to optimize its Supply Chain. The basic principle of VMI it that the manufacturer is responsible for managing the stock of its customers, that are mainly distributors. VMI is complex since it links two different organizations with two different IT systems. Having the keys of the customers’ stock is a great responsibility, particularly today when the pressure on the costs is permanent. As a consequence, the manufacturer needs to reach high levels of performance if he wants to improve its relation with the customer. Any failure can mean a loss of business. From 2005 to 2007 Schneider Electric did a pilot experience with one of its big Dutch customer. Looking at the logistic KPIs this experience was a real success. Both companies were very happy about the results. But the resources invested by Schneider Electric in this project were quite important. This closed the door to any implementation of VMI on a larger scale. The target of my project was to improve the efficiency of our internal VMI processes in order to reduce the investment of time needed to implement and maintain new customers. An analysis of the time spent on various tasks showed that there were a lot of manual steps and operations. Furthermore the solution implemented for the first customer was complex and with limited capacities. By developing a new tool Schneider Electric could industrialize VMI. Once it has been identified that a new tool was needed, I had to define an architecture that allows: - To handle a lot of data - To implement easily new customers - To reduce significantly the time needed to run up VMI The solution is based on a set of Access databases communicating with each others. Three main databases are the core of this project. Customer’s data is stored in a specific database (one database per customer), another database is used for the interface and a third one is making the calculations and communications between the others. As a result all the operations are simplified for the user. He can carry out most of his tasks only with one click when it could take him one complete day in the past. Once this solution was developed, the first VMI customer migrated to it without any issue (Fully transparent for the customer). It has then been implemented successfully with a new customer in a record time! Unfortunately, due to the global crisis, Schneider Electric temporary decided summer 2008 to slow down the implementation of VMI since even if it is costing less today, it is still representing a cost.