A Consumer Centric VMI Methodology for a Collaborative Supply Chain Model – An Answer to Demand Volatility

The increase in the market competitiveness and demand volatility is urging organizations to be more responsive to the customer needs. An out of stock scenario is a huge loss in the consumer products sector as it is a loss of revenue and a loss of brand loyalty which cannot be afforded. This raises the need for a consumer centric collaborative supply chain model. A Vendor Managed Inventory (VMI) practice is a collaborative inventory replenishment technique engaging the suppliers and the retailers. This paper proposes a next generation VMI methodology which is based on a cloud environment which can integrate the customer demand in the entire value chain. This would eventually result in higher customer service levels and inventory on-shelf availability. This proposed methodology has been implemented as a case study with one of the major clients, various parameters such as customer satisfaction and demand fluctuations were studied and compared with the present scenario. The methodology proposed here will benefit both sides of the supply chain (suppliers and retailers) by improving the visibility ultimately resulting in an improved collaborative supply chain model. This paper also intends to highlight the importance of collaboration of all role players in the entire end to end chain.