Stasis

April 27, 2014
9:02 pm

sta•sis (ˈsteɪ sɪs, ˈstæs ɪs)
n., pl. sta•ses (ˈsteɪ siz, ˈstæs iz)
the state of equilibrium or inactivity caused by opposing equal force

It was 1988. I was involved in early Vendor Managed Inventory (VMI) pilots. In my work at Clorox we were starting to ship to Walmart using Retail Link. We were excited. It seemed like the start of a great thing. In the pilot, we were able to see retailer flows. We talked furiously about the design of the End-to-End Supply Chain (E2E).

At that time, the conference circuit was buzzing. The words collaboration, Efficient Consumer Response (ECR), Vendor Managed Inventory (VMI), and Collaborative Planning, Forecasting and Replenishment (CPFR) filled the air. The promises were thick. The concepts were right, but the execution was flawed. The processes were overhyped and companies rushed head-over-heels to join the throng.

Today, the average Consumer Packaged Goods (CPG) company has eleven VMI relationships and six VMI planners. Based on the research that we are doing, we can see that the programs are not growing. They are not contracting. Instead, they are caught between sales-driven and supply-driven processes. We have stasis.

While our initial energies were focused on large accounts, today’s VMI programs are getting the best traction in the drug and dollar channels. There are few VMI programs left with Publix, Safeway, Target and Walmart conspicuously absent. Kroger’s movement to Market6 added to the stasis. Companies are shipping fewer and fewer cases using VMI processes.

The programs operate as on an island. Only one company interviewed is actively working on the building of E2E processes, outside-in, connecting the flows of VMI. Ironically, while it is connected to the outside world, it is not well-connected to the manufacturer’s enterprise systems. Most companies’ demand-planning systems do not allow easy integration of retail data; and the connection to the planning systems requires an unwanted redesign that most companies try to avoid.

Figure 1.

Reflections

We are now entering our third decade of managing VMI processes. Most of the programs have been inherited. The teams running them were not part of the overhyped exuberance.

The teams running them are heads-down and in management mode. Most of the VMI processes report through customer service. The technologies are fixed and the processes are tried-and-true. These teams are not actively trying to design End-t0-End flows or synchronize the VMI programs with other demand signals. It just is. VMI has become a reliable part of the order flow.

At Supply Chain Insights, we are in the process of completing a study on VMI that will publish in our May Newsletter. (The study is still open. If you would like to participate and compare your results to those of the industry, just access the VMI Study through this link.) We currently have 35 responses and are trying to drive the response rate to at least 50.

A Head-Scratcher

In the study, the average company reduced the costs of transportation by 3% and reduced the order cycle time by at least a day. And, as shown in Figure 1, the orders are cleaner and more reliable. Customer service levels improve. So, why if the process reduces costs, improves order cycle times, and order reliability, are we not driving greater adoption? These preliminary results make me scratch my head. Why are we at a stasis? Why are we not taking advantage of VMI more actively? I think the answer lies in the fact that the program is juxtaposed between the opposing forces of sales and supply. When companies become market-driven and understand the differences between a sales-driven approach and a market-driven value chain, the processes take on greater value. The mapping of flows outside-in and horizontally across the company enables greater value.

The more research that I do, the more I scratch my head. The CPG organizations talk more about collaboration than other industries, but they have made less progress than high-tech and electronics or A&D’s work on Performance-based Logistics (PBL). We have had a lot of talk and flurry over initiatives, but we are at a stasis.

What do you think? I would love your thoughts. Why is VMI at a stasis?

Warning: Sidestep the Narrative of the Misguided Goldiggers

August 10, 2026 4:58 pm

Ten years ago, I started writing a book titled Stories of the Misguided Gold Diggers. The book was a collection of stories from two decades of stories of technology leaders perpetuating the myth of integrated end-to-end supply chain planning.

I dusted off the manuscript on Saturday. I think that we have a new chapter. Companies focused on putting Artificial Intelligence (AI) on top of existing architectures are putting AI Stupid on steroids.

The Myth of End-to-End Planning

July 31, 2026 9:14 pm

Supply chain planning, supply management, supply chain execution, network design, and transportation/logistics management operate in silos. Not much has changed over four decades. The connections flow back through transactional systems: order-to-cash and procure-to-pay. There is a myth that companies can buy an end-to-end supply chain management solution. This is largely a myth. Here we explain.

Lead Time: A Broken Gossamer

July 16, 2026 6:38 pm

If you are struggling with supply chain planning, dancing in the light of shiny objects, and scratching your head, please read on. My goal is to help you.

Please do not AI Stupid. What do I mean? AI Stupid is putting agents and agentics on top of existing architectures believing that making them faster and hands free add value. To me, this is fools play.

I love AI. I am excited about new technologies. To this end, I want to shine a light on how new technologies can help address the black holes and inconsistencies in today’s supply chain, which largely stem from the limitations of the first generation of supply chain planning and execution technologies. In this blog, I give you three places to start.

Do You Need a Supply Chain Coach?

July 9, 2026 5:27 pm

Supply chain is where the rubber hits the road. For a public company, over 40% of market capitalization is tied to the trade-offs between growth, operating margin, inventory management, and Return on Capital Employed.

The road for supply chain improvement is fraught with issues. Here we share some and offer some advice.

Is your Supply Chain AI Ready?

June 11, 2026 2:39 pm

A simple quiz to assess an organization’s AI readiness.

The pace of change is fast and furious. Every day, technology advances faster than we can digest. A great challenge to have.

Determining whether a supply chain is “AI-ready” is less about technology and more about the gray matter between the ears of supply chain leaders. Leadership, alignment, and clarity of goals matter.

Too few companies are clear on the definition of supply chain excellence. Measuring and rewarding functional metrics reduces the firm’s value. Putting agentics on top of today’s processes can make bad practices run faster, reducing value.

The toughest job for the supply chain leader is challenging existing supply chain paradigms that were defined by the limitations of decades of supply chain technologies. As the curtain lifts on the potential of new forms of technology, process redefinition is our opportunity, but only if we are clear on what drives value. (Here, I link to the Supply Chains to Admire reports to help you define value. The next report will be published on June 23rd, along with my Dynamic Benchmarking Product, to help you define value in the face of your AI readiness. More information about the launch is at the bottom of this blog.)

Case Study: A Scrappy Demand Management Approach

June 9, 2026 5:37 pm

This study of Franklin Sports shines a light on the work that needs to be done at the sales account level to challenge a retail forecast, and also highlights the importance of a new technique for a forecast engine — reinforcement learning.

Artificial intelligence comes in many forms — large language models, generative AI, machine learning, unstructured text mining, deep learning, neural networks, reinforcement learning, agents, and agentics. While the industry is wigging out about agentics, I think reinforcement learning is a great step forward in the journey of Artificial Intelligence.

Supply Chain Shaman