Process Choice Recommendations
Taking into consideration the information discussed above, EIDX makes the following recommendations for the application of forecast/planning and replenishment models:

Planning Forecast

• Products suitable for a forecast environment but not suitable for other forecast/planning processes
• Products that can be forecasted based on demand for higher level assemblies

Material Release (Classic) or Embedded Release

• Products with stable demand
• Products suitable for long-term contractual commitment (strong recommendation)
• Product with low incidence of unplanned pulls
• Products with high assurance of supply (satisfactory on-time delivery performance and no quality problems)
• High-volume (but low-volume not strictly excluded)

Classic Material Release vs. Embedded Release
The Classic Material Release involves the use of discrete releases and should be considered if one or more of the following conditions apply:

• When releases are more frequent than weekly or when more precise ship schedule requirements are needed than allowed in 830/DELFOR
• Daily shipments
• JIT - specific time of day specified
• Specific location within a ship-to address
• Bar-code / label data needs to be conveyed

• Contractual terms are such that forecast files do not imply authorization to ship (a discrete release must be issued per contract)
  
• When the forecast is a consolidated (corporate) forecast, not segregated by forecast-type, ship-to location, etc.
  
• If the trading partner's system cannot process releases embedded within the material release forecast file (it can be processed by the planning system but can't be processed by the open order or shipping system)

Unless the above conditions apply, embedded release is recommended. It is more efficient, and saves on transmission and processing costs.

Forecast-Based SMI (Supplier Managed Inventory)

• Products that qualify for material release and that meet these additional criteria:
  • Low past-due demand
  • Single-sourced product (strong recommendation)
  • No strategic value-added by buyer managing the inventory levels
  • Putting hard-allocated parts on SMI is a trading partner issue.
  • Combining SMI and consignment is a trading partner issue.

Things to Consider When Choosing a Replenishment Process
The choice of whether to use a replenishment process and which one to use may depend on any one of the following:

• Source of the forecast
• Reliability of the forecast
  In general, if forecasts are unreliable (which does not imply fault on the part of any trading partner), the traditional planning forecast should be considered; in some cases, it may be advisable not to forecast products to a trading partner.
• Stability of the forecast
  Stability of the forecast is often due to of the product’s stage in it’s life model, but may also be due to other factors, such as market conditions.
• Buyer-managed vs. supplier-managed inventory
  Although buyer-managed vs. supplier-managed are among the choices of forecast/planning model, a trading partner’s company strategy to move towards one environment or another may be a factor in deciding which forecast/planning model to use. For example, although SMI is recommended only for single-sourced parts, if a company has a strategy of moving towards SMI, they may decide to put multiple-source parts on an SMI process.
• Use of third parties
  When third parties are involved, trading partners have to consider what the data needs of all concerned parties are, and whether all parties can support these needs via electronic exchanges. In some cases, B2B systems and data applications have not been designed to support things like dual-routing of transactions. Data applications themselves may need changes to house data which needed for the B2B transactions, but did not need to be maintained for the manual process. Third-parties may include Distributors, Contract Manufacturers, Carriers, Warehouses and others.
• Product mix and volume
  Some processes work better for certain product mixes and volumes than others, depending on trading partners’ systems capability, procurement or marketing strategy, and other factors. Mix and volume may be relative, in that on trading partner’s high volume part may be a low volume part for the other partner. Once again, EIDX makes recommendations, but the decision is ultimately up to individual trading partners.
• Stage of the product in life-cycle
• What the customer wants
• Impact on seller of other customers
• Systems capabilities and limitations
• External factors (transportation, customs, etc.)

Summary Comparison of Methodologies