Vendor Managed Inventory is the process where the supplier generates orders based on mutually agreed objectives and demand information sent by the customer.
Vendor Managed Inventory (VMI) is a streamlined approach to inventory management and order fulfillment. VMI involves collaboration between suppliers and their customers (e.g., distributor or retailer) which changes the traditional ordering process.
The goal of VMI is to align business objectives and streamline supply chain operations for both suppliers and their customers. The operational benefits that can be leveraged by those companies operating a VMI solution is a result of:
- Improved Inventory Turns
- Improved Service
- Increased Sales