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?
- 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).
- TrueCommerce Datalliance’s VMI platform reviews the data and sends a recommended replenishment order.
- The supplier reviews the recommendations.
- The supplier then creates a purchase order and sends to a customer (distributor, retailer, end user).
- 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!