While VMI allows the supplier to manage the deliveries and subsequent stock levels of the retailer who purchases the products as part of the process, consignment stock describes the process whereby the retailer controls stock levels but the stock is still owned by the supplier whilst it’s in the retailer’s warehouse.
These two processes are not always mutually exclusive. In a VMI relationship the supplier sometimes still owns the inventory but they have the added value of replenishing the inventory which can help prevent overstocking and in some cases shrinkage. VMI adds a much more collaborative approach between the retailer and supplier which puts less pressure on the supplier’s cashflow.