VMI (vendor managed inventory): The vendor or distributor receives electronic data about the customer's sales and stock levels. The vendor is responsible for creating and maintaining the inventory plan. The vendor generates the replenishment order, not the customer.
Consignment: The vendor or distributor places inventory at a customer's location and retains ownership of the inventory. Payment is not made until the item is actually sold or consumed.
Third-party: Similar to VMI, except that a third-party company (usually a logistics provider) takes responsibility over maintaining stock levels and the inventory plan.
Milk run development
We have focused on the transportation of components from our suppliers in our review of logistical steps. In the past, each supplier contracted an individual distribution company to transport components. Instead, by having a single distribution company to travel around the suppliers in sequence, picking up shipments, we can eliminate duplication of routes. This approach has reduced the total travel distance for 2t and 4t trucks by 34,645 km, saving 6,771 Liters of fuel equivalent to 17.9t of CO2. We will invite more suppliers to participate in these milk runs in future.