A customer service strategy used by suppliers to manage their customers inventory and reorder points to lower cost and improve service.
The management of stocks on behalf of a customer by the supplier, the supplier taking responsibility for the management of stocks within a framework that is mutually agreed by both parties. Examples are seen in separate supermarket racks maintained and stocked by merchandising groups for such items as spices, and car parts distributors topping up the shelves of dealers/garages, where the management of the stocks, racking and shelves is carried out by the merchandising group or distributor.
An element of inventory stocked by one organisation but where the forecast demand and required stock levels to meet that demand are calculated by the manufacturer or distributor of the items concerned.
A practice, similar to continuous replenishment (CRP), where POS and inventory data is sent to suppliers who assume the responsibility for managing their inventories inside a distributor's organization.
is a process in which a supplier generates orders for its distributor based on demand information sent by the distributor. Vendor Managed Inventory was first applied to the grocery industry, between companies like Procter & Gamble (supplier) and Wal-Mart (distributor). But increasingly, Vendor Managed Inventory is providing the benefits of smoother demand, increased sales, lower inventories and reduced costs to other industries.
Vendor receives information about current levels of inventory stocked by him in the central warehouse; the inventory levels required to meet demand forecasts are calculated by the vendor (optimum batch sizes for supply of goods)
A customer service strategy used to manage the customer's inventory toward lower cost and improved service. VMI is used often between retailers and their suppliers and has been in use by some as early as 1985.
Vendor Managed Inventory (VMI) is a family of business models in which the buyer of a product provides certain information to a supplier of that product and the supplier takes full responsibility for maintaining an agreed inventory of the material, usually at the buyer's consumption location (usually a store).