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Agenda Our understanding of the automotive logistics needs What is VMI – definition, procedures and benefits Challenges of VMI in China Case study Brief introduction to China Logistics Company An automotive OEM’s logistics needs cover both inbound and outbound operations of parts and finished vehicles Supply chain management (SCM) is the strategic management tool that coordinates the material and information flows across the value chain to support adaptiveness “Demand-pull” value chain requires the companies to be flexible and able to “control” a large part or the entire supply chain Third-party logistics providers (3PLs) can directly, or through a partner network, provide a range of services Difference between traditional business model and VMI model Simplest VMI workflow Consolidation and Loading Center is commonly used to reduce the complexity in coordinating multiple vendors Win-win situation can be achieved for both manufacturers … Planning and ordering costs for the manufacturer go down due to the responsibility being shifted to the vendor Improved customer service – vendors can better respond to customers’ inventory needs in terms of both quantity and location Reduced demand uncertainty – by constantly monitoring customers’ inventory and demand stream, the number of large, unexpected customer orders will dwindle, or disappear The manufacturer is more focused than ever in providing good service and the overall service level is improved by having the right product at the right time Speed and accuracy of data processing are improved due to computer-to-computer communications Reduced total logistics cost and improved cash-flow … and vendors Smoothing demand – the supplier is able to smooth the peaks and valleys in the flow of goods, and therefore to keep smaller buffers of capacity and inventory. Better coordination – the supplier has better opportunities to co-ordinate the shipments to different customers, such as scheduling - either postponing or advancing - s
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