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SAP SCM: Applications and Modeling for Supply Chain Management (with BW Primer) by Wood, Daniel C.

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Chapter 12. Inventory Collaboration Hub and APO Collaboration

B2B Context of ICH and Collaboration

VMI, B2C, and B2B

The dot-com bomb of 2000 did much to take the wind out of the sails of B2C (business-to-customer e-commerce). While the web-driven retail e-commerce storm of the 1990s rapidly proceeded to undergo consolidation, a much more stable form of e-commerce was in equally rapid gestation: B2B (business-to-business e-commerce). B2B e-commerce held and holds several qualities that positively distinguish it from B2C. For one, B2B arose at the same time as the vendor-managed-inventory (VMI) concept was gaining traction. That is, historically vendor interest in sold inventory ended somewhere between shipment and receipt, with the periodic exception of returns or lost shipments. A commercial outlet shelving the vendor’s products for sale traditionally took on inventory management responsibility, including replenishment. When stock on the shelf fell below an adequate level, for example, a new order was procured to the vendor. This model was applicable both for finished goods, such as product sold at a retail outlet, or for raw materials and semifinished goods, such as materials stocked for use in the production of a finished good by a manufacturer.

Enabled by better transactional inventory tracking through UPC codes and radio frequency identification (RFID), modern VMI evolves this arrangement by extending vendor planning of inventory beyond delivery. In a VMI arrangement the vendor ...

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