The case is the supply chain manangement at W'up bottlery

Dear students:

This week's case study requires a basic understanding of the Vendor Management Inventory (VMI) concept.Those unfamiliarwith itshould find a source to understand how VMI functions.

You can look at two opportunities to consider VMI forW'Up. Upstream and downstream.

W'Up can work with its glass vendors to establish a VMI solution for the new empty bottles. The vendors'job is to ensure the plant has the glass needed to produce every batch of soft drink planned. This would be the upstream opportunity.

On the other hand,W'Up can implement a VMI solution with its distributors and retailersby placing inventory in their facilities at W'Up's risk. This would be thedownstream opportunity.

This type of supply chain collaboration requires information sharing among the participants. This seems to be an obstacle in this situation, as the different players have their own ideas about protecting data they obtain from their clients.

Here is a suggested path to assist Mr.Mehra, with a focus on the downstream opportunity:

1. Estimate the current inventory level of product every month by using information from Exhibits 4 and 5.

2. Estimate the possible impact of implementing VMI over the figures obtained from the first calculation. To accomplish this, one can make assumptions on the number of inventory-days that could be reduced in every stage of the flow. A moderate scenario may be the elimination of one inventory-day per stage (excluding pipeline). A more aggressivescenario could be taking two inventory-days off the cost. One can also consider the possible elimination of W'Up's depots, as their own inventory can be staged at the distributors' facilities.

3. Estimate the savings resulting for every scenario in the cost of inventory.

With this information at hand, Mr.Mehracan initiate a campaign to convince his management to shift to a VMI solution and persuade the other members downstream to collaborate in the VMI process by opening the information box in exchange for a higher profit margin.

You are encouraged to create your own approach, as long as you provide meaningful advice to Mr.Mehra, while demonstratingcritical thinking and numerical analysis. Simplywritingabout the subject and offering only vague recommendations is not acceptable at this course level.

I hope this is helpful.

Regards,

Humberto Florez, PhD

Adjunct Faculty