Marketing Ppt

PROJECT REPORT OPERATIONS anxiety GUIDED BYPRESENTED BY Prof. T. T. NIRANJANNITIN BANSAL 129278039 RANJAN SAHU 129278041 ROHIT MANGAL 129278053 SAURABH SINHA 129278057 find Report On Taxonomy of carrying into action Problems in VMI Contents decision take outr summary3 Introduction4 Under the characteristic task shape4 vender Managed bloodline model4 freight rate bloodtaking4 manageer Managed armory and Stakeholders Challenges5 Challenges approach in carrying into action of vender Managed armoury7 Analysis of Cases of fulfilling Vendor Managed take stock9 Conclusion11 References12 Exe ablationive summaryThe goal of Vendor Managed roll is to append a mutually undecomposed birth where both(prenominal) postures Customer and Vendor slip away be able to envision the availability and flow of goods more smoothly and closely. InVMIa manufacturer or allocator assumes the portion of memorial planning for the customer. coarse information sharing is require d so that the manufacturer/ distributer hatful hold up a high degree of profile of its goods at the customers location. ins afternoon tead of the customer re visualizeing when its supply has been exhausted, the supplier is liable for replenishing and stocking the customer at grant aims.Wal-Mart has masteredVMIand is the comp whatsoever against which numerous some other organizations benchmark themselves. This melodic theme covers various issues that be to be considered to implement the Vendor Managed Inventory. It is realize in the report that several risks be to be considered while executing VMI. The prim analysis is through with(p) in pursuit the scenarios where one issue functions a tonality factor in deciding to implement VMI or non. Both Marketers and Distributors confound their induce issues to challenge the implementation of VMI. Focus of the report is to determine taxonomy of implementation problems in VMI.Introduction A means of optimizing sum up Ch ain procedure in which the manufacturer is responsible for watch overing the distributors memorandum take aims. The manufacturer has retrieve to the distributors pedigree data and is responsible for generating purchase line of battles. We contribute lift up the differences in maintain size of it up as Under the typical business model When a distributor needs product, they regularise an recite against a manufacturer. The distributor is in total control of the timing and size of it of the order cosmos placed. The distributor maintains the record plan.Vendor Managed Inventory model The manufacturer receives electronic data (usually via EDI or the internet) that tells him the distributors gross gross sales and stock levels. The manufacturer kitty view every item that the distributor carriers as closely as authentic train of sale data. The manufacturer is responsible for creating and maintaining the memorandum plan. Under VMI, the manufacturer generates the ord er*, non the distributor. *Note VMI does not careen the ownership of scrutinise. It remains as it did antecedent 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 actually sold. A VMI alliance may or may not involve consignment inventory. Vendor Managed Inventory and Stakeholders Challenges Vendor Managed Inventory primarily set out various stakeholders regard which includes Vendor/Manufacturer or distributor and retail merchant. Let us check challenges faced by each Challenges in VMI Implementation from vendors side High administrative costs Suppliers would set out to face higher administrative costs.They declare oneself assimilate to allocate extra round resources to properly act the renewal activities that were antecedently managed by the retailer. So to over lift these additional costs, vendors must give up to save luxuriant money from the inv entory costs and fitting sales volumes and gross margins pass of commercialise take due to less ledge reportage VMI would help in cut the inventory which could lead to the less coverage of the shelf dummy on the retailers shop which might lead to the reduction in the market share for that product.To resolve this issue, vendor stool provide more stock keeping units of the selfsame(prenominal) product 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, then in that respect is forever and a day a fear in the brainiac of the retailer that he would loose his control over the operations management. All the decisions akin when to order, how much to keep as inventory and when to sell the product would be managed by the vendor now which privy withal have some impact on the profit margin of the retailer.Eg. In many cases, Vendor gives discounts to the retailer if they buy in bu lk and hence 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 parliamentary procedure in small tidy sums. Danger of being replaced Retailer would be afraid that after implementing of VMI, when al to the highest degree all the operations management related decisions are taken by the vendor, then the vendor might besides think of forward integrating.Hence he would not be fully cooperative in sharing of the data and he would ever so try to read his presence felt up in decision making to show the importance of his post. Fear of losing other vendors The retailer would be afraid of losing other vendors, since in the FMCG business retailers frustrate products from a care of vendors to maintain variety for the customers. It would be troublesome to choose the vendor who will manage the inventory, because the same vendor would be unilateral towards his products.This would lead to the development of bad birth mingled with the retailer and the other vendors. afterward implementation of VMI, forecasting of accept is done by the manufacturer, not by the retailers or distributors and it might hit back, if manufacturer is not competent in judging the patterns of the consumer indigence. Challenges faced in implementation of Vendor Managed Inventory Personal Factors Trust One of the most important factors which can contribute to the mastery of the VMI is trust and good relationship among the vendor and the downstream retailer.But in the FMCG sector, where thither 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 ineffective communication between them and both have to incur massive inventory and management costs. Work ethics and cultural differences Each company has its posture of work ethics and wo rk polish and if the difference is huge for a vendor and the retailer, then their decisions would not be aligned. adept IssuesTechnology is one of the most critical factors in facilitating the implementation of VMI which can also live as a challenge in the implementation of VMI. A lot of adept corpses would have to be installed for the effective running(a) of the VMI. Some of the technical effects that can facilitate an effective VMI arrangement include electronic data exchange (EDI). EDI transactions can enable suppliers to efficiently manage customer inventory levels remotely. make fullment software. These applications allow customers to accurately assess projected service levels (i. . the contribution of requests that can be filled from stock) establish on various inventory investment fundss. prohibition coding or radio relative frequency identification (RFID). These technologies tag products for pencil leading consumptions and can dramatically improve the speed and fair encounter of the collection and reporting of consumption data. soothsaying software. These applications gather and analyze information from sales, accounting, order entry, and other business systems, using train algorithms and predictive modeling techniques to generate fast, accurate demand forecasts. investiture- A lot of investment would be required to install and maintain any of these systems. Properly equipped custody would be required to operate these tools. Investment would also be required to unify these tools with each other for efficient surgery of the VMI operations. All this cost would have to be incurred by the vendor and to compensate this cost, he must get returns from the efficient inventory management and higher sales volume due to less stock-outs. Testing- It requires a lot of fourth dimension and money in interrogation the various VMI systems after installing them.An lengthy testing has to be done for the EDI system before giving it a concluding green flag for the VMI system. Analysis of Cases of implementing Vendor Managed Inventory Lets reason some cases where VMI is implemented Barilla watering place Case Barilla is largest manufacturer of angelic and dry pasta products with more than curtilage SKUs. It has sales of around $2B and very still demand at retail level. Challenges it was face are as under Retailers didnt have large inventories to accommodate freshly products introduced from time to time.Stock outs are quiet keep going at DOs. Thin margins for both manufacturers and retailers are adding to the problem. Solution offered through VMI downriver distribution Center (DC) reports inventory and sales data electronically to Barilla on a daily basis. Barilla is managing the inventory of DC and decides how much to ship to them. correspond to manufacturing Weeks Best Plants 2006 Statistical Profile, 56% of the top 25 plants between 2002 and 2006 have used resident suppliers to manage or replenish inventory.Howe ver, the average percentage of purchased materials and components (dollar volume) managed by on-site suppliers is solo 13. 7%. So, it seems, there is a time and place for vendor-managed inventory. For example, if youve got an overpriced manufacturing line and you ask one of your key suppliers to put 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 conductor of supply mountain range management at ARC Advisory Group, Dedham, Mass. However, you may have a lot of suppliers where you are only when 1% of their total revenue &8212 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 find the feasibility of implementing VMI.In addition, there is a plastered amount of IT integratio n 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 out of them and have visibleness into your inventory levels on an ongoing basis, says Banker. tour that into useable intelligence is kind of difficult. subtile 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 germ Industry Weeks Best Plants 2006 Statistical ProfilePercentage Of Purchased Materials And Components (Dollar Volume) Managed By On-Site Suppliers Year Median spurious Minimum 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 Similar ly, we have case of P&G which successfully employed Vendor managed Inventory while ODLO isnt so successful in implementing the same.Also companies like RUAG arent having any financial or strategic upbeat 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 concern 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) answer and aligned its product replenishment bidding with the real demand of regional distributors/customers, hence increasing service level, optimizing stocks and boosting sales. ACHIEVED RES ULTS Increase of trueness in sales forecasts Increase of sales by 47% for participating retailers meliorate management of a product mix, by reducing or discontinuing low-performance and low-turnover products Streamlined replenishment of high-performance productsExcellent overall case with customers using the solution. VONPAR With Agentrics VMI solution, acquired a full, web-based supply chain KPI tool. Vonpar Refrescos, Brazils fourth 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 forge, meliorate service and optimizing stock levels, while astir(p) customer relationships.ACHIEVED RESULTS Average sales increase of 26 percent in the freshman 12 months after the solutions implementation hearty in crease in sales of juices, tea and beer, which reflects improved stock planning for great availability of products at store level Maximized speed in the exchange of sales information at store level Stock optimization allowing Vonpar to have the rectify product at the right time in the right place commercial message 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 agriculture through innovative enquiry 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 offshoot time in the agricultural market, a company is able to co-manage inventory demand like large retail chains, says Marcos Mazza, affix Chain Manager. Ne oGrid has a solution that suddenly 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 highlight 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 understanding 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 Manage d Inventory theres more to it than just sell products. Effective Inventory. com Collaborative Planning, Forecasting, and Replenishment Committee. (1998) collectively Managed Inventory Approach Provides a cut back Level of Detail. CPFR. Org http//www. scm. ethz. ch/publications/Practitioner_publications/Niranjan_etal_2011_Are_you_ready_for_VMI. pdf http//www. emeraldinsight. com/journals. htm? articleid=1620974show=abstract http//openarchive. cbs. dk/ contend/10398/8229 http//www. supplyon. com/vendor-managed-inventory_at_zf. html http//www. industryweek. com/procurement/vendor-managed-inventory-size-matters