| Many business and distributors do their own inventory | | | | For the manufacturer the benefits include making |
| forecasting, they compare supply with demand, past | | | | inventory forecasting easier because they are able to |
| sales, present sales and come up with a figure that will | | | | check out the data of the point of sales for the |
| allow them to purchase the amount of product they | | | | distributor. There are fewer errors to handle on the |
| need to keep their distributions running smoothly. | | | | distributor end because all of the inventory forecasting |
| Distributors place their order with the manufacturer and | | | | will be done in house. The Manufacturers ability to see |
| in return the buyer gets their product straight from the | | | | stock levels will allow them to supply the distributor will |
| distributor, if the inventory forecasting is done properly | | | | stock that is low or has even run out. Keeping the |
| there is never an excess of product and the business | | | | upper hand on stock levels allows the manufacturer to |
| runs smoothly. | | | | know exactly what is needed before the need arises. |
| Where inventory forecasting goes wrong is when the | | | | What is the downside of vendor managed inventory? |
| distributor does not take into account all of the outside | | | | As discussed earlier, customer gains and losses can |
| factors that may play a roll in supply and demand. | | | | have an impact on demand forecasting because the |
| Managing consumer predictions, client base, supplier | | | | loss of a customer or the addition of a large customer |
| production and so forth is all part of the process. | | | | will play a roll as to how much stock may be needed |
| Vendor managed inventory places the responsibility of | | | | at any given time. Knowing customer ordering habits |
| inventory forecasting on the manufacturer. They | | | | can be hard at first so having just the right amount of |
| receive the necessary data via the internet or other | | | | product in the beginning can be a challenge when the |
| source and they create and maintain the inventory plan | | | | manufacturer is doing the inventory forecasting. |
| based on the data provided. | | | | Finally, deciding whether to perform inventory |
| What are the benefits of using vendor managed | | | | forecasting in house or releasing it to the vendor is a |
| inventory? | | | | decision the distributor will have to make. There are |
| For the distributor that could mean a big reduction in | | | | several factors to look at and working out the kinks |
| inventory. They will be able to save costs by taking | | | | can take time but can be profitable for both sides in |
| this part of management and placing it in the | | | | the long run. Good communication between the |
| manufacturer's hands. They are always insured of | | | | manufacturer and distributor will play a large part in the |
| product availability and can increase their service due | | | | success or potential failure of vendor managed |
| to the demand forecasting being removed from the | | | | inventory and inventory forecasting and should be |
| equation. The distributor will be able to focus on the | | | | taken into consideration before making the decision. |
| customer and provide a better quality service. | | | | |