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.