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Insights: 2nd Edition
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Strategy & Execution

Study and example SaaS Application - Vendor Managed Inventory (VMI)

By Steve Keifer, Vice President, Global Marketing, GXS

Real world examples help to illustrate the benefits that SaaS can offer supply chain applications. One example of a popular SaaS application used in the supply chain is Vendor Managed Inventory (VMI). VMI applications typically provide rich graphical interfaces that allow end users to track inventory on hand, in transit, on order and out-of-stock at an individual part or SKU level. Additionally, the application can model and predict out-of-stock situations based upon forecasted consumption and replenishment plans.

For such an application, how should support and licensing costs be distributed among the community? Value is derived by both the customer and the supplier. The benefits to the customer are reduced out-of-stocks and lower inventory costs. The benefits to the supplier are increased sales and supply chain flexibility. Both parties incur significant costs to operate the VMI application as well.

SaaS provides an elegant solution for VMI applications. Licensing and support fees can be equitably distributed among the supplier and customer. Remote hosting enables secure, reliable, high performance accessibility from a variety of retail stores, manufacturing plants and distribution centers. The third-party SaaS vendor acting in a neutral capacity can provide governance to feature enhancements and upgrade requests for the application.

VMI is just one of many examples of supply chain applications that benefit from the SaaS model. GXS offers a number of SaaS applications which offer total cost of ownership and time-to-market advantages over traditional software models:

 

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