Companies in the automotive sector realised they get better service if they share demand forecasts with their suppliers and set up automatic ordering. This system is called customer delivery schedules and works so well that wholesale distributors in other industries are starting to adopt it.
From your point of view, it means you need to have the technology in place to work with these customers. But customer delivery schedules also help you manage inventory more effectively. That means you can reduce costs and improve margins. The investment pays for itself fast.
Customer Delivery Schedules uses the UN data standard EDIFACT to receive forecast information from your customer. You can then plan purchasing and delivery around their forecasts so that you can reduce inventory and therefore costs. It has the added benefit of enabling you to work more closely with your customers.
Operating in the mode that suits your customer
In VMI (Vendor Managed Inventory — in this case you are the supplier), the system receives customer’s sales statistics and their stock on hand and max and min inventory levels. This is a gross forecast. IBS software uses this information to calculate which products are required and when they should be delivered. It automatically creates orders and your customer is automatically replenished.
Your customer may not use VMI or may prefer to control the ordering process, in which case they use a net forecast. Here you get an automated message telling you what to supply and when in the standard data format. IBS software handles those requests automatically and enables the impact on your inventory management.
With either scheme, you can keep your inventory to a minimum and costs in control. All the while, you keep your customers by using a system that improves their materials management.
Communicating critical supply information
Customer Delivery Schedules links your customers’ data to the ordering process and to your picking and delivery system. Paperwork and plans are created to make sure deliveries happen on time.
However, although you are allowing your customers to say how they would like to be supplied, you retain control. The software calculates lead times and delivery dates. If there is a mismatch between the calculated dates and the customer’s requirements, warnings are automatically generated telling your customer there may be problems and allowing you to manage the problem. Warnings do not stop the automated ordering process.