Vendor Managed Inventory

Packaging, Handling, and Storage

All materials and products are handled, stored and packaged according to the manufacturer’s safety data. There are applicable safety regulations to prevent injury to personnel or damage to the goods.


Finished goods and raw materials are supposed to be stored in given storerooms until the day of shipment.


The inventory system dictates that the amount of material ordered is usually the smallest to complete a customer order. The preferable system is FIFO System since it maximizes value and use.


Unless otherwise stated, packaging must follow established packaging standards and existing guidelines. Additionally, labeling is required for all goods according to the specific requirements of the customer (Coyle, 2009).

All the above affects logistics as these factors have to be taken into consideration while creating a viable supply chain management.

It means that this process in under the management of the vendor who decides when and how much to replenish. In some cases, the vendor receive electronic alerts via EDI from the distributor giving information on what the distributor has sold and what is currently in inventory. Through this information, the vendor decides when to generate a purchase order (Vendor managed, 2010)

Vendor managed inventory has its own benefits. Firstly, the customer/distributor does not need a safety stock since the vendor knows when to stock without the distributor running out. Secondly, the distributor benefits from reduced purchase costs because the vendor receives data and not purchases orders. Lastly, the vendor himself gains access to a customer point of sale data and thus helps in forecasting.

How today's consumers are empowered and how they impact Supply Chain Management

With the advent of the internet and new digital technologies, consumers are becoming more empowered since they have raised expectations of personalized information and demand in services. This creates a situation when the brands have to work extra hard to become notable. The empowered customers do not require a brand to speak directly to them through adverts. All information is a click away, and customers can easily share recommendations with their friends in the social media. Moreover, they can even turn to opinions of strangers depending on reviews and ratings to determine which products to buy. The Insider (2012) identifies how the empowered customer affects supply chain management. Consumers dictate transparency for companies through their communication of information in their sites. Since most of the empowered customers are of the new era of technology, most brands need to use such opportunity to channel their messages via the various available digital media. This activity enables the customers to get the required information to adapt to their brand loyalty.

How globalization and consolidation in supply have increased complexity

Globalization and consolidation in supply chains have in recent times increased complexity for organizations. It is real in terms of SKUs, transportation requirements, customer/supplier locations, taxes and trade regulations. Hence, companies have to take measures to simplify the aspects of supply chains. SKUs for companies are expanding and this causes inventory management problems hence companies have to rationalize SKUs to eliminate the problem. Consequently, managers should look into customer/supplier locations in order to avoid high cost operations. Customer service levels also need to be rationalized. Levels of complexity keep increasing as long as globalization and consolidation exist and companies have to find a solution to reduce the complexity (Coyle, 2009).

Supply Chain Management & Role of Logistics in Supply Chains

Logistics plays a great role in supply management since the interaction of the logistic systems in an organization in a supply chain greatly help the management in this area. Logistics interconnects with other departments of an organization such as marketing, manufacturing, and finance hence helps in the coordinating of activities of the supply chain. Lastly, logistics adds time, quantity utilities, and place. Thus, it enhances form and possession utilities provided by the marketing and manufacturing department.

Discuss the major change drivers in our economy and in the global marketplace

Change is inevitable, and recently our economy has been rapidly changing and need to study and understand the major change drivers in the economy as well as the global market.


Advent of technology has led to an empowered customer who no longer needs a brand to give information through advertisement but can find necessary information through the social media.

Globalization and consolidation

Globalization and consolidation has led to increasing complexity in the economy as well as the global market. This change that has led to organizations trying to rationalize customer/supplier location and customer service levels.

The rationale for the development of supply chain management in leading organizations cash flow has been a measure of financial viability in both the national economy and the global market. Supply chain is a major determinant of improved cash flow because it affects the order time cycle to customers.

Capital consumption

Supply chains are also an important determinant of the capital consumption and this have an effect on working capital, assets and inventory levels.

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