Marketing Ppt

PROJECT REPORT OPERATIONS MANAGEMENT GUIDED BYPRESENTED BY Prof. T. T. NIRANJANNITIN BANSAL 129278039 RANJAN SAHU 129278041 ROHIT MANGAL 129278053 SAURABH SINHA 129278057 Project Report On Taxonomy of Implementation Problems in VMI Contents executive director summary3 Introduction4 Under the typical dividing line model4 treater Managed scrutinize model4 Consignment caudex4 trafficker Managed origin and Stakeholders Chall(a)enges5 Challenges faced in useation of Vendor Managed Inventory7 Analysis of Cases of downing Vendor Managed Inventory9 Conclusion11 References12 Executive summaryThe goal of Vendor Managed Inventory is to provide a mutually safe relationship where two sides Customer and Vendor give be able to control the availability and flow of goods more smoothly and accurately. InVMIa maker or distributer assumes the role of live stress intend for the client. Extensive learning sharing is needed so that the manufacturer/allocator crowd out halt a high d egree of visibility of its goods at the customers location. Instead of the customer re smart case-hardeneding when its supply has been exhausted, the provider is responsible for replenishing and jobing the customer at appropriate levels.Wal-Mart has masteredVMIand is the company against which many a(prenominal) other organizations benchmark themselves. This report covers various issues that argon to be considered to implement the Vendor Managed Inventory. It is realized in the report that several risks are to be considered while executing VMI. The proper analysis is make in check up onking the scenarios where wholeness issue becomes a list factor in deciding to implement VMI or not. Both Marketers and Distributors sire their own issues to challenge the death penalty of VMI. Focus of the report is to determine taxonomy of carrying out problems in VMI.Introduction A bureau of optimizing Supply Chain performance in which the manufacturer is responsible for affirming the el ectrical distributors broth levels. The manufacturer has access to the distributors record data and is responsible for generating purchase ranks. We flush toilet see the differences in hold in stocktaking as Under the typical business model When a distributor needs output, they manoeuver an order against a manufacturer. The distributor is in total control of the timing and size of the order being placed. The distributor maintains the account plan.Vendor Managed Inventory model The manufacturer receives electronic data (usually via EDI or the internet) that tells him the distributors gross revenue and stock levels. The manufacturer can make e genuinely item that the distributor carriers as well as reliable point of sale data. The manufacturer is responsible for creating and maintaining the catalogue plan. Under VMI, the manufacturer breaks the order*, not the distributor. *Note VMI does not change the ownership of inventory. It frame as it did prior to VMI. Consignment InventoryWhen the supplier places inventory at a customers location and retains ownership of the inventory. Payment is not made until the item is existently sold. A VMI relationship may or may not involve consignment inventory. Vendor Managed Inventory and Stakeholders Challenges Vendor Managed Inventory primarily harbour various stakeholders intricate which includes Vendor/Manufacturer or distributor and retailer. Let us show challenges faced by each Challenges in VMI Implementation from vendors side High administrative cost Suppliers would feature to face higher(prenominal) administrative costs.They will have to allocate special staff resources to powerful manage the replenishment activities that were previously managed by the retailer. So to overcome these additional costs, vendors must have to save enough money from the inventory costs and sufficient gross revenue volumes and gross margins spill of securities industry share collectable to less shelf coverage VMI woul d help in reducing the inventory which could lead to the less coverage of the shelf space on the retailers shop which might lead to the reduction in the market share for that crossroad.To resolve this issue, vendor can provide more stock keeping units of the same harvest-feast to fill the shelf space and to maintain the market share. Challenges in VMI Implementation from retailers side Loss of Control If VMI is implemented, thence thither is always a fear in the mind of the retailer that he would loose his control over the trading operations management. All the closings bid when to order, how much to keep as inventory and when to sell the product would be managed by the vendor now which can overly have close to impact on the profit margin of the retailer.Eg. In many cases, Vendor gives discounts to the retailer if they buy in bulk and because above mentioned questions become crucial for the retailer from financial point of view. In case of products with high shelf life, he might want to order in bulk once, instead of ordering in small swarms. risk of exposure of being replaced Retailer would be afraid that after implementing of VMI, when al nearly all the operations management related decisions are taken by the vendor, then the vendor might also think of forward integrating.Hence he would not be fully cooperative in sharing of the data and he would always try to make his presence felt in decision making to show the importance of his role. Fear of losing other vendors The retailer would be afraid of losing other vendors, since in the FMCG business retailers situate products from a lot of vendors to maintain variety for the customers. It would be difficult to choose the vendor who will manage the inventory, because the same vendor would be biased towards his products.This would lead to the phylogenesis of bad relationship between the retailer and the other vendors. After implementation of VMI, forecasting of expect is done by the manufacturer, n ot by the retailers or distributors and it might hit back, if manufacturer is not competent in sagacity the patterns of the consumer demand. Challenges faced in implementation of Vendor Managed Inventory Personal Factors dedicate One of the most important factors which can contribute to the success of the VMI is deposit and good relationship between the vendor and the downstream retailer.But in the FMCG area, where in that location are a lot of products in the same segment, most of the retailers are unwilling to share their data related to their sales with anyone, even with their supplier. This leads to the futile communication between them and both have to incur huge inventory and management costs. Work ethics and cultural differences Each company has its set of work ethics and work culture and if the difference is huge for a vendor and the retailer, then their decisions would not be aligned. Technical IssuesTechnology is one of the most critical factors in facilitating the implementation of VMI which can also stand as a challenge in the implementation of VMI. A lot of good systems would have to be installed for the effective working of the VMI. Some of the technical roots that can facilitate an effective VMI arrangement include Electronic data switch over (EDI). EDI transactions can enable suppliers to efficiently manage customer inventory levels remotely. Replenishment software. These applications allow customers to accurately assess projected armed service levels (i. . the fate of requests that can be filled from stock) based on various inventory investments. Bar coding or radio frequency identification (RFID). These technologies dock products for tracking purposes and can dramatically improve the speed and integrity of the sight and reporting of consumption data. Forecasting software. These applications gather and analyze information from sales, accounting, order entry, and other business systems, using sophisticated algorithms and predi ctive modeling techniques to generate fast, accurate demand forecasts.Investment- A lot of investment would be required to install and maintain any of these systems. Properly equipped manpower would be required to operate these tools. Investment would also be required to mix these tools with each other for efficient functioning of the VMI operations. All this cost would have to be incurred by the vendor and to compensate this cost, he must exhaust returns from the efficient inventory management and higher sales volume cod to less stock-outs. Testing- It requires a lot of m and money in examen the various VMI systems after installing them.An extensive testing has to be done for the EDI system before giving it a final green flagstone for the VMI system. Analysis of Cases of implementing Vendor Managed Inventory Lets discuss some cases where VMI is implemented Barilla Spa Case Barilla is largest manufacturer of merry and dry pasta products with more than 1000 SKUs. It has sales o f around $2B and very stable demand at retail level. Challenges it was facing are as under Retailers didnt have large inventories to accommodate new products introduced from period to time.Stock outs are quiet frequent at DOs. Thin margins for both manufacturers and retailers are adding to the problem. Solution offered through with(predicate) VMI Downstream distribution Center (DC) reports inventory and sales data electronically to Barilla on a insouciant basis. Barilla is managing the inventory of DC and decides how much to ship to them. According to fabrication Weeks crush Plants 2006 Statistical Profile, 56% of the top 25 plants between 2002 and 2006 have used resident suppliers to manage or replenish inventory.However, the average role of purchased materials and components (dollar volume) managed by on-site suppliers is only 13. 7%. So, it seems, there is a time and place for vendor-managed inventory. For example, if youve got an expensive manufacturing line and you ask one of your key suppliers to mold in the systems and develop the expertise to supply the goods you need on a just-in-time basis, they will do that if they receive a significant portion of their revenues from you, says Steve Banker, service director of supply chain management at ARC consultative Group, Dedham, Mass. However, you may have a lot of suppliers where you are only 1% of their total revenue you are not their biggest priority, Banker says. The chances that they will take on added responsibility and costs to manage your inventory is low. So we can see that size of the business does matter in determining the feasibility of implementing VMI.In addition, there is a certain amount of IT integration that has to go on in order to make the VMI relationship work. For suppliers, they need to be able to get your forecasts on a regular basis, make intelligence agency out of them and have visibility into your inventory levels on an ongoing basis, says Banker. Turning that into useable intelligence is kind of difficult. Small and midsized companies often dont have the dedicated IT resources to make that happen, so they struggle. Resident Suppliers Manage/Replenish Inventory (% Of Plants) Year No Yes 2002 44 56 2003 52 48 2004 48 52 2005 32 68 2006 44 56 2002-2006 44 56 Source Industry Weeks shell Plants 2006 Statistical ProfilePercentage Of Purchased Materials And Components (Dollar Volume) Managed By On-Site Suppliers Year Median Mean negligible Maximum 2002 5. 0 24. 4 0. 0 100. 0 2003 0. 0 12. 2 0. 0 100. 0 2004 4. 0 15. 2 0. 0 70. 0 2005 6. 0 13. 8 0. 0 67. 0 2006 4. 2 15. 1 0. 0 95. 0 2002-2006 3. 0 13. 7 0. 0 100. 0 Source Industry Weeks Best Plants 2006 Statistical Profile Similarly, we have case of P&G which happyly employed Vendor managed Inventory while ODLO isnt so successful in implementing the same.Also companies like RUAG arent having any financial or strategical benefit out of implementing VMI and hence didnt go for it. If we analyze the sector in which they operates we come to know, RUAG which is in Airlines sector involves comparatively simpler inventory to maintain while the risk involved in giving away the detail was higher. On the other hand, with the scale of business P&G is in, it is beneficial for both manufacturer (vendor) as well as distributor (or Retailer) to implement VMI. It can be seen both scale and sector favors P&G.GRENDENE, one of the worlds largest footwear manufacturers, implemented Agentrics Vendor Managed Inventory (VMI) consequence and aligned its product replenishment process with the real demand of regional distributors/customers, thus increase service level, optimizing stocks and boosting sales. ACHIEVED RESULTS Increase of accuracy in sales forecasts Increase of sales by 47% for participating retailers Improved management of a product mix, by reducing or discontinuing low-performance and low-turnover products Streamlined replenishment of high-performance products tenuous overall result with cu stomers using the solvent. VONPAR With Agentrics VMI solution, acquired a full, web-based supply chain KPI tool. Vonpar Refrescos, Brazils fourth part largest Coca-Cola bottling company with products reaching 14 million consumers, implemented Agentrics Vendor Managed Inventory (VMI) solution and with it acquired a complete web-based KPI tool. KPIs track internal and client stock levels, demand planning, order administration, as well as automation of Vonpars product replenishment process, improving service and optimizing stock levels, while improving customer relationships.ACHIEVED RESULTS Average sales increase of 26 percent in the depression 12 months after the solutions implementation Significant increase in sales of juices, tea and beer, which reflects improved stock planning for greater availability of products at store level Maximized speed in the exchange of sales information at store level Stock optimization allowing Vonpar to have the right wing product at the right time in the right place Commercial team freed up to focus on avoiding out-of-stocks. SYNGENTA Implemented Agentrics VMI solution to manage stock jointly with its suppliers.Syngenta, a world-leading agri-business committed to sustainable horticulture through innovative research and technology, implemented Agentrics Vendor Managed Inventory (VMI) solution to manage stock in conjunction with its suppliers ACHIEVED RESULTS Reduction of communication errors through process automation and visibility to inventories. Today, our customers say that for the first time in the agricultural market, a company is able to co-manage inventory demand like large retail chains, says Marcos Mazza, Supply Chain Manager. NeoGrid has a solution that abruptly suits our business model Syngenta did not have to adapt to the tool, as the solution metall our needs. Marcos Mazza, Supply Chain Manager. Conclusion The main purpose of this report is to set off the taxonomy of implementation problems in VMI. From the cases visited, we can deduce that various factors play key roles in determining whether to go for Vendor Managed Inventory as there are lot of issues and cost involved in implementing the same.Size of the business, Sector of the business in operation, inter-relationship among stakeholders all plays equally important role in the actual decision making. Though there is no clear cut taking into custody on whether to implement VMI or not but one can easily concur with increasing role of technology and with dynamic demand it is only going to rise.References Williams, M. (1998). Making Consignment and Vendor-Managed Inventory Work For You. APICSInternational Conference. Schreibfeder, J. (1997). Vendor Managed Inventory theres more to it than just sell products. effective Inventory. com Collaborative Planning, Forecasting, and Replenishment Committee. (1998)Jointly Managed Inventory Approach Provides a overturn Level of Detail. CPFR. Org http//www. scm. ethz. ch/publications/Practitione r_publications/Niranjan_etal_2011_Are_you_ready_for_VMI. pdf http//www. emeraldinsight. com/journals. htm? articleid=1620974show=abstract http//openarchive. cbs. dk/handle/10398/8229 http//www. supplyon. com/vendor-managed-inventory_at_zf. html http//www. industryweek. com/procurement/vendor-managed-inventory-size-matters