An Inventory Management method is a tool, technique or strategy used for storing, tracking, delivering, forecasting and ordering inventory or stock.

VMI is a method of Inventory Management which places the responsibility of shop floor replenishment with the supplier. Through a collaborative relationship the supplier works on orders generated by the retailers demand information to ensure the retailer doesn’t experience stock outs.

The benefits of VMI for suppliers and retailers include:

• Suppliers save money by sending the right quantities and types of products to customers.
• Customers (distributors/retailers/end users) benefit by having the right products without overstocking.
• Suppliers and their customers benefit by not missing sales because of out-of-stock items.
• Increases in inventory turns means fewer product returns to a supplier.
• Suppliers spend less time managing orders, and inventory levels remain stable for customers.