Vendor-Managed Inventory (VMI)

Vendor-Managed Inventory (VMI) is a collaborative supply chain strategy in which the supplier takes responsibility for managing and replenishing the buyer’s inventory levels.

Under this model, the supplier has access to the buyer’s inventory data and sales forecasts, enabling them to monitor stock levels and restock goods as needed. VMI shifts the burden of inventory management from the buyer to the supplier, often resulting in more efficient inventory turnover, reduced stockouts, and better supplier-buyer relationships.

With VMI, the supplier gains more control over the timing and volume of shipments, which can optimize their production schedules and logistics. For the buyer, VMI reduces the complexity of managing inventory and ensures that stock levels are maintained without the need for frequent purchase orders.

This model is particularly beneficial in industries with high turnover rates or seasonal demand fluctuations, such as consumer goods, retail, and manufacturing.

For example, a supermarket chain might use VMI to ensure that essential items like milk, bread, and eggs are continuously stocked on shelves without manual intervention. The supplier of these items monitors the inventory levels in real time and ships new stock when necessary.

Relatico supports VMI by providing a platform where both buyers and suppliers can share real-time inventory data and collaborate on stock management. This ensures that inventory levels are optimized based on actual demand, reducing excess stock, lowering operational costs, and improving service levels.

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