What does vendor-managed inventory (VMI) enable suppliers to do?

Vendor-managed inventory (VMI) enables suppliers to manage inventory levels on behalf of the buyer, streamlining the supply chain process. In a VMI arrangement, the supplier takes responsibility for maintaining the inventory at the buyer’s location. This includes monitoring stock levels and making replenishment decisions without needing constant communication with the buyer. The supplier uses data and insight into inventory turnover, sales trends, and demand forecasts to ensure the right amount of product is readily available, reducing the risk of stockouts or excess inventory.

This collaborative approach fosters a stronger partnership between the supplier and the buyer, allowing for improved efficiency and reduced costs. It helps in aligning supply chain operations with actual consumption patterns, leading to better overall inventory management. By having the vendor oversee these aspects, the buyer can focus on other critical business operations, enhancing productivity and customer satisfaction.