PAY ON SCAN – VMI

Supply Chain Management (SRC) – is a term everybody is talking about, but what does it really mean? This is about optimising the supply chain so as to avoid running out of stock, while maintaining the lowest possible stock levels. To accomplish this, information input is required from all points, from the point of sale (scanning cash registers) to producers.

VMI stands for vendor-managed inventory – this umbrella term refers to a business relationship between industry and retail in which the supplier assumes responsibility for replenishing stock.

Pay-on-Scan is a VMI technique including these main features: the producing firm take responsibility for supplying their goods to all of the stores belonging to a certain retail chain. They regularly determine required quantities of goods and deliver them in consignment.

The retailer provides the producing company with daily electronic reports on the number of items sold at each store as well as with current stock information. Based on this data the producing firm schedule deliveries for replenishing stock. They also take responsibility for delivering to stores. No orders of the traditional sort are received. They utilise electronic means (EDIFACT delivery notice) to notify a store of imminent delivery.

The volume of goods sold to consumers serves as the basis for settling accounts between the business partners. The retailer thus sells, using scanning cash registers, the producer’s goods under commission and then pays for these goods (“pay-on-scan”).

The leader in using this technique is the Fegro/Selgros cash-and-carry store chain. Other retail chains are also making increasing use of this system (e.g. Karstadt where it is termed “Shop in shop”).

Pay-on-scan cannot be modelled using conventional ERP systems. Therefore we have developed the Pay-on-Scan Easy system, which can be linked to your ERP system if you desire. Get in touch with us!