What is VMI? | What is Vendor Managed Inventory?

What is Vendor Managed Inventory?

Vendor Managed Inventory (VMI) is a collaborative approach to inventory management and order fulfillment.

What is Vendor Managed Inventory?

Vendor managed inventory (VMI) is a supply chain methodology that allows a supplier to launch orders with their trading partners. This collaborative approach to inventory management and order fulfillment enables a supplier to take an active role to improve supply chain performance. Plus, VMI combines data from both trading partners, which creates accurate orders and less rework.

Benefits of VMI?
  • Improved inventory turns
  • Improved service (i.e., higher in-stock percentages)
  • Increased sales

How Does It Work?

  1. TrueCommerce Datalliance receives data from a distributor, retailer or end user called a Product Activity Report. The report contains information such as sales, product transfers, and inventory position (on hand, on order, in transit).
  2. TrueCommerce Datalliance’s VMI platform reviews the data and sends a recommended replenishment order.
  3. The supplier reviews the recommendations.
  4. The supplier then creates a purchase order and sends to a customer (distributor, retailer, end user).
  5. Once the customer approves the purchase order, the order is shipped.

Why Do Suppliers and Their Customers Love VMI?

  • 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.

Because it creates Stronger Business Relationships!


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