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Vendor Managed Inventory in Supply Chain

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by Beroe Inc,
29 November 2022

What is Vendor Managed Inventory (VMI) in Supply Chain?

Vendor Managed Inventory (VMI) supply chain is a management technique in which the supplier is responsible for managing inventory at the customer's site. 

It includes forecasting demand, ordering and replenishing stock, and managing inventory levels. VMI can help improve communication and collaboration between suppliers and customers, leading to improved inventory management and cost savings.

Vendor managed inventory (VMI) has become increasingly popular in streamlining the supply chain and improving inventory management in recent years. It can provide several benefits, including reducing inventory costs, improving customer service levels, and reducing the administrative burden on the customer. 

There are several factors to consider when deciding whether VMI is suitable for the business. First, the retailer needs to have a good relationship with its supplier and be confident in managing its inventory. 

Second, the retailer needs sufficient storage space at the site to accommodate the inventory. And finally, the retailer needs to be comfortable giving up some control over the inventory to the supplier.

While choosing a VMI supply chain, it's essential to carefully consider the pros and cons of  Vendor managed inventory for the business and to deploy it in place the necessary safeguards to ensure it is successful.

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