This recommendation is based on two documents: Odette’s Vendor Managed Inventory (VMI) and AIAG’s Inventory Visibility and Interoperability Min/Max Replenishment Business Process Future State (IBP-1) It describes the basic business process model, corresponding functionality, responsibilities, and implementation steps for the Collaboration Managed Inventory Minimum/Maximum (CMI Min/Max) methodology.

Modern Supply Chain Management (SCM) concepts address important root causes of current limitations in logistics networks. Efficient build-to-order strategies and short time-to-delivery goals require fast and flexible supply networks. In this context, visibility/transparency is a prerequisite of high-level integration between customer and supplier and plays a central role.

The CMI Min/Max methodology represents one major process type in the family of consumption-based replenishment systems. This document sets a standard for the overall CMI Min/Max methodology and corresponding applications. The ultimate goal is to enable global, standardized use of CMI Min/Max applications from different software providers and marketplaces.

CMI Min/Max checks continuously whether actual or planned inventory levels are too high or too low in relation to demand. Suppliers will get near-real-time information to help them synchronize their production with customer consumption.
With CMI Min/Max implementations, there are cost savings due to the increased visibility between supplier and customer by reducing non-value-added and administration costs, making supplies more secure and efficient, and reducing inventory and transport costs.

This visibility allows inventory to be reduced on both sides. Still more savings can be realized if a continuous improvement approach is used. Once CMI Min/Max is implemented at a location, several things become very clear:

• Which parts have too much inventory – shown by excessive carrying costs, high obsolescence costs, and excess use of space.
• Which parts have too little inventory – shown by premium freight costs, line shutdowns, unplanned schedule changes, and overtime.
• Which suppliers are consistently maintaining the correct inventory levels – reflected in supplier performance measurements.

When a continuous improvement approach to CMI Min/Max is adopted, reviewing these items will affect Key Performance Indicators (KPIs) that, in turn, will impact the entire operation. CMI Min/Max essentially puts in place an upper and lower control limit on inventory levels. When the exceptions to the levels are reviewed, carrying costs, obsolescence costs, floor space utilization, line shutdowns, and overtime costs can be reduced.

When the performance levels of suppliers are reviewed, capable suppliers can be identified. With these suppliers, inventory limits may be adjusted lower since there is a confirmed confidence in their capabilities. Because of the added visibility given to suppliers, they are allowed to add their insight into the process. Their ability to see the forecast and the daily usage by the customer will quickly give visibility to potential issues. A customer that moves to CMI Min/Max replenishment and does not solicit input from suppliers is doomed to failure.

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