The trends in inventory control discussed are Electronic Data Interchange, Vendor Managed Inventory, Scan-Based Trading, CPFR, and Radio Frequency Identification. How have any of these trends changed ? Give examples of how they are applied. You may also indicate new trends that you research in this area. (Mini10 sentence) (please cite the website)

Additional Information

Trends in Inventory Control Companies are now seeing that collaboration between suppliers and vendors is important to making the supply chain successful. This idea of working together in a healthy relationship is driving what is being developed for the future of inventory management. Electronic Data Interchange EDI is helping many businesses in sharing data and improving inventory control. EDI is simply a way by which companies communicate electronically via computer systems directly to one another. When companies do not have the technology necessary, there are third party vendors that provide the connectivity necessary for trading electronically. EDI has many facets. If the customer (e.g., retailer) makes inventory information available to the supplier, the supplier can utilize EDI to know when their inventory needs replenishing and can adjust the near-term manufacturing forecast plan using this information. Additionally, when a company needs to place an order, they can do this through an EDI system and avoid a paper trail of purchase orders because the system will automatically save the information. It provides faster communication from one entity to another and companies can access real time data. Other information flows through an EDI system, as well, such as accounts receivable, returns, chargebacks, receiving, and so forth. Each EDI communication system is specific to the retailer and the vendor. This is also considered B2B (Business to Business) electronic communication. Vendor Managed Inventory (VMI) Using a VMI program, a company outsources its inventory control to their supplier. VMI works by allowing the supplier to have electronic access (usually through EDI and sometimes through web-based access) to the customers inventory database. Suppliers can monitor the movement of the inventory through the customer (e.g., manufacturer or retailer) and can manage their own inventories, purchases, and production accordingly. VMI programs can result in inventory reduction due to the supplier handling inventory tracking and replenishment planning. Suppliers can many times receive preferred vendor status if they are able to participate in VMI. It is important to know if this is something that your customer or potential customers want to achieve. If so, as the vendor you should be prepared accordingly. Scan-Based Trading (SBT) SBT is mainly used by supermarkets, however, the concept is growing in popularity with retailers such as do-it-yourself (DIY) stores. Using point-of-sale information the system allows for a perpetual inventory count; when an item is scanned at checkout the computer system adjusts the inventory accordingly and transmits data to the supplier. This information is usually captured on a daily basis and transmitted by batch to the vendor each day.

The difference in this system compared to other perpetual inventory control is that the supplier owns the inventory until the item is scanned for purchase; ownership of the goods passes at the time of the sale to the final consumer. At the time of sale, the title of the goods passes from the manufacturer, to the retailer, and, ultimately, to the consumer, all of which occur simultaneously. The retailer is obligated to pay for the goods, generally 7 to 10 days after the sale to the consumer (these terms are usually more favorable than the standard 3060 day terms for other inventory). The supermarket acts like a warehouse for the manufacturer. The supplier gets real-time information on when their products are bought and can schedule their deliveries based on how much of an item remains in the store. SBT can reduce inventories, cut labor costs, streamline distribution, and maintain the optimal amount of inventory, saving money for both the supplier and store. It should be noted that in this type of situation the burden of inventory carrying costs moves from the retailer to the manufacturer, including but not limited to shrink (loss of inventory due to damage or theft). Collaborative Planning, Forecasting, and Replenishment (CPFR) CPFR combines EDI and VMI. It is different because it allows more shared information between two entities and increases collaboration. It links the supply and demand of a product so that the retailer is more involved in the supply chain because both companies will be able to see the entire supply chain from one end to the other. The final retailer will be able to be involved from the manufacturing of raw materials to the final product. All the suppliers that are involved in the process of making an item are linked together and can get information about the other. This helps to determine shortcomings of material of any manufacturer in the chain so that companies can plan accordingly. Radio Frequency Identification (RFID) A technology that has started to emerge to help with inventory management is RFID. RFID uses a computer chip and reader to let the user know when an item has arrived at an entrance and when it leaves an exit. Wal-Mart first started to use this in 2000 for individual items but dropped the study and decided it would be better to track pallets of goods. This has been the trend in industry as of this time. Until costs are reduced substantially, RFID at the pallet level is as detailed as tracking will get within the supply chain except for high value items. All these programs are used to keep real-time data on inventory. They are designed so that a company and its supplier will know simultaneously when it is running short on inventory which means that the cycle time in ordering becomes shorter, more frequent with smaller lots. This type of situation helps both parties involved. It creates a continuous and steady flow of work for the supplier instead of having major highs and lows and retailers can depend on smaller inventory investments to satisfy the needs of its customers without stock outs.