On an IBM DS3500 SAN you need to regularly check the event log because certain informational events won't trigger an alert but do indicate a likely impending drive failure. Seeing an isolated VDD repair is normal, but when you see one paired with a "Destination drive error" or a "Drive returned unrecoverable media error" then there's a good chance that drive will eventually fail, and IBM support will send a replacement drive without argument.
Once you have the drive in hand there are a couple steps to successfully replace the drive. First you need to unassign all your hot spares (of which you should have at least one). You do that by going to the "Physical" tab in IBM Storage Manager for the SAN, right clicking on the hot spare, selecting "Hot Spare Coverage", and then manually unassigning individual drives. This needs to be done otherwise as soon as you fail the bad drive it'll start rebuilding onto a spare.
Once your hot spare are unassigned click on the bad drive, and then go to "Advanced" and select "Fail Drive". Once the drive is failed you can physically remove it from the enclosure, wait several seconds, and then insert the new drive.
You don't need to do anything to start the rebuild process, as the system automatically does it. You can look at current operations to see the rebuild progress. It will rebuild each logical drive in turn. Once it starts rebuilding you can reassign the hot spares.