Standard VMI

You can use this process to implement a standard vendor-managed inventory

Prerequisites

Technical prerequisites
You have configured each of the systems as required. For more information,
see Settings for Vendor-Managed Inventory.

Business Prerequisites
VMI collaboration is only possible if the customer material satisfies the
requirements for warehouse-oriented replenishment planning. In particular,
this means that the change in stock can be forecast with a comparatively high
level of reliability and without major random fluctuations.
The data required for VMI planning is transmitted through Electronic Data
Interchange (EDI) or eXtensible Markup Language (XML) messages and is
stored persistently in SAP APO. The following data can be processed here:
 Stock on hand
 Sales history
 Promotion sales
 Sales forecast
 Promotion sales forecast
 Open purchase order quantities
 In-transit quantities
You can also transfer the following data through EDI:
 Stock in transit
 Proof of delivery

Process
1. The customer sends stock and sales data from its SAP ERP system to the
vendor, who then uses this data to stock up the customer's warehouse
independently.
2. As an option, the vendor can process the forecast data in Customer
Forecast Management, analyzing it and making the necessary adjustments
before releasing it to Demand Planning. For more information,
see Customer Forecast Management.
3. The vendor generates planned independent requirements based on the
customer's historical sales data using the statistical forecasting methods of
Demand Planning. For more information, see Demand Planning.
4. The vendor defines a short to medium-term plan on the basis of the
demand plan, also taking into account the current stock figures at the
customer location provided by the customer. For more information,
see Supply Network Planning.
5. The vendor creates optimized distribution plans using the deployment
function in Supply Network Planning, defining when and how the products
available at the vendor location are to be delivered to the VMI customers.
For more information, see Deployment.
6. In Transport Load Builder (TLB), the vendor groups the transport
recommendations generated for individual products during deployment into
TLB shipments of multiple products to optimize the utilization of transport
capacities.
7. The vendor's SAP ERP system automatically creates sales orders based
on the TLB shipments confirmed by the ATD (available-to-deploy quantity)
check.
8. The SAP ERP system transfers the sales order number to SAP APO during
change transfer.
9. The vendor sends an order confirmation (message type ORDRSP with
message code VMI) to the customer through EDI or ALE during the change
transfer between SAP ERP and SAP APO. In the standard system, the
order confirmation for the sales order is generated as a message of output
type BAV0. The customer's SAP ERP system automatically creates a
purchase order on the basis of the order confirmation.
10. If the purchase order number has not been assigned in SAP APO, it is
transferred to the vendor's SAP ERP system by IDoc (message
 type ORDCHG with message code VMI) and entered in the sales order as
a reference.
11. After processing the sales order, the vendor creates an outbound
delivery in SAP ERP.
12. The vendor reduces the VMI sales order and generates a delivery in
SAP APO.
13. The vendor posts a goods issue for the delivery in SAP ERP, then
reduces the delivery and generates stock in transit at the customer location
in the SAP APO system. The vendor can send a shipping notification
(DELVRY03 IDoc with message type DESADV) to the customer's SAP ERP
system if desired. In this case, the customer's SAP ERP system
automatically creates an inbound delivery. Otherwise, the customer creates
the inbound delivery manually.
14. The customer posts a goods receipt in its SAP ERP system and sends
a proof of delivery to the vendor's SAP APO system (DELVRY03 IDoc with
message type STPPOD). In its SAP APO system, the vendor reduces the
stock in transit at the customer location. Alternatively, the stock in transit
can be reduced using a PROACTIDoc, based on information about open
purchase order quantities.
The process described above is shown in the following figure:
Standard VMI Process
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Consignment VMI
You can use this process to implement a combination of customer
consignment and vendor-managed inventory. In this scenario the vendor
maintains and manages a stock of its products at the customer's site as
 vendor consignment stock and carries out replenishment planning on behalf of
the customer.

Prerequisites
 You have activated the business function Vendor-Managed
Inventory (APO_VMI_CONS) in SAP ERP.
 The vendor and the customer have made the required settings for vendor-
managed inventory in their respective systems. For more information,
see Settings for Vendor-Managed Inventory.
 The vendor has defined the consignment sales document type to be used
in the process in Customizing. For more information, see Customizing
for SAP ERPunder Integration with Other mySAP.com
Components Advanced Planning and Optimization Application-Specific
Settings and Enhancements Settings and Enhancements for Sales
Orders Settings for Vendor Managed Inventory (VMI) Define
Customer/Plant Assignment and Configure ATP Check .
 In the case of a process with a third party logistic provider as the special
stock partner, the vendor has implemented the optional BAdI VMI Third
Party Logistic Provider Scenario. This ensures a correct mapping of
consignment stock to the relevant customer location.
 The customer regularly provides the following information to the vendor:
o Sales history
o Promotion sales
o Sales forecasts
o Promotion sales forecasts
o Withdrawal of material from the consignment stock

Process
1. The customer sends original customer forecasts to the vendor.
2. As an option, the vendor can process the forecast data in Customer
Forecast Management, analyzing it and making the necessary adjustments
before releasing it to Demand Planning. For more information, see Customer
Forecast Management.
3. The vendor generates planned independent requirements based on the
sales forecasts and the customer's historical sales data using the statistical
forecasting methods of Demand Planning. For more information,
see Demand Planning.
4. The vendor releases the planned independent requirements from Demand
Planning to Supply Network Planning.
5. Based on the demand plan, the vendor defines a short to medium-term plan
to fulfill the demand quantities estimated, also taking into account the
current consignment stock figures stored in the vendor's SAP ERP system
as consignment stock. For more information, see Supply Network Planning.
6. The vendor generates optimized distribution plans using the deployment
function in SNP, also defining when and how the products available at the
vendor's site are to be delivered to the VMI customers. For more
information, see Deployment.
7. The vendor groups the transport recommendations generated for individual
products during deployment into TLB shipments of multiple products using
Transport Load Builder (TLB). This ensures an optimal utilization of
transport capacities. For more information, see Transport Load Builder.
8. The vendor's SAP ERP system automatically creates a consignment fill-up
order based on the shipments confirmed by the ATD (available-to-deploy
quantity) check and generates an outbound delivery.
9. The system transfers the sales order number to the vendor's SAP APO
system during change transfer.
10. The vendor's SAP APO system updates the TLB shipment as a VMI
sales order, and the vendor creates a delivery for the sales order.
11. The vendor posts a goods issue for the delivery in SAP ERP.
12. In the SAP APO system, the vendor reduces the delivery and the stock
at the ship-from location, and proceeds in either of the following ways:
o Updates the consignment stock in SAP ERP and the stock at the
customer location in SAP APO.
o Updates the consignment stock in transit in SAP ERP and transfers it to
the customer location in SAP APO. As soon as the stock is available at
the consignment location, the vendor reduces the consignment stock in
transit and increases the consignment stock in SAP ERP, also updating
the relevant figures in SAP APO.
13. When the customer sends information of withdrawing material from the
consignment stock, the vendor creates a consignment issue order and an
outbound delivery in SAP ERP.
14. The vendor posts a goods issue in SAP ERP and issues an invoice for
the customer.
15. Accordingly, in SAP APO, the vendor reduces the consignment stock at
the ship-to location.

Consignment VMI

More Information
For information about the standard (non-consigned) VMI process,
see Standard VMI.
For information about the parallel use of a standard and a consigned VMI
process, see Shipment Split in the VMI Scenario.