VENDOR-MANAGED INVENTORY (VMI)

VENDOR-MANAGED INVENTORY (VMI)

ABSTRACT:

Vendor – Managed Inventory, popularly known as VMI is gaining great momentum in retail business processes for the optimization of the Supply Chain, especially in the electronics industry. This paper is aimed at educating its readers as to what VMI is, what are the critical steps involved in its implementation and its various benefits and pitfalls, supported by suitable case studies.

INTRODUCTION

Vendor Managed Inventory popularly known as VMI is gaining great momentum in retail business processes. In this era of tough competition retailers are implementing every supply chain optimization process that will reduce their costs, reduce inventory levels and increase profits. Efficient supply chain management requires the rapid and accurate transfer of information throughout a supply system. Vendor Managed Inventory (VMI) is designed to facilitate that transfer and to provide major cost saving benefits to both suppliers and retailers/customers. Vendor Managed Inventory is a continuous replenishment program that uses the exchange of information between the retailer and the supplier to allow the supplier to manage and replenish merchandise at the store or warehouse level. In this program, the retailer supplies the vendor with the information necessary to maintain just enough merchandise to meet customer demand. This enables the supplier to better project and anticipate the amount of product it needs to produce or supply.

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