Vendor-managed inventory (VMI) programs have been around for decades. But, not all programs are created equal. The difference between good and great programs involves a host of variables. However, when it comes to making good vendor programs great, collaboration is the secret ingredient that makes everything work more proficiently. A way to simplify the supply chain process, VMI helps monitor inventory accuracy while maintaining optimal stock levels and reorder points.
VMI is an inventory management program in which the supplier of goods assumes the responsibility of optimizing the inventory on behalf of a manufacturer. The supplier has continuous access to the manufacturer’s inventory data and is the decision-maker with regards to the size and timing of reorders. This policy allows suppliers to determine the most efficient production schedules and production volumes, leading to cost reductions, and can also prevent the stocking of unnecessary inventories.