Vendor Managed Inventory

Vendor Managed Inventory (VMI) is a means of optimizing Supply Chain performance in which the manufacturer is responsible for maintaining the distributors inventory levels. The manufacturer has access to the distributors inventory data and forecast and is responsible for generating purchase orders to meet their needs.

Through Vendor Managed Inventory, the ordering process is driven by demand information sent by customers to suppliers.

Keys to a successful VMI program:

Knowledge of existing inventory
Accurate forecast
Accurate product build rates
Amount of safety stock need to account for spikes
Accurate costs of the VMI program
How to negotiate terms for slow moving stock
Adequate notice of product life cycle to account for lead times
Both parties agreeing to a reasonable liability model

Advantages of a well-run VMI program:

Shorten the supply chain
Supply chain runs more efficient
Inventory reduction
We handle the Purchase Orders, not you; thus, operational cost reduction
Better business relationships
Reduction in expedited shipments

Vendor Managed Inventory

Keys to a successful VMI program:

Advantages of a well-run VMI program:

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