LDM’s Collaborative Replenishment service removes the operational and technical complexities of collaborative replenishment to allow small, independent retailers, retail groups and their suppliers, to realize the same benefits as large retailers and suppliers.
The service uses the information generated by data sharing and data analysis, services to enable Electronic Data Interchange (EDI) based collaborative replenishment between members of its trading community.
LDM’s Collaborative Replenishment service supports 2 types of collaborative replenishment:
- Scan Based Trading (SBT)
- Vendor Managed Inventory (VMI)
Scan Based Trading
SBT is essentially consignment selling in which suppliers own and manage in-store inventories of their products; and retailers pay for the merchandise only when it is sold.
Product codes, prices, promotions and shrink are agreed in advance; and suppliers use sales data, suggested inventory levels, and shipments to determine the quantity of merchandise required.
Historically, SBT has been used most commonly in publishing, entertainment, and horticultural retailing for products such as newspapers, magazines, DVDs, CDs and garden seeds, but its use is now expanding to retail sectors.
Vendor Managed Inventory
With VMI, suppliers replenish in-store inventories based on agreed inventory levels and frequencies, but unlike SBT, retailers take ownership of the merchandise and pay for it when it is delivered.
The key benefits of both SBT and VMI to both retailers and suppliers are:
- Reduced stock-outs
- Reduced over stocks
- Reduced inventory costs
- Increased sales
- Improved customer service
- Reduced staff costs