Vendor Managed Inventory
What is it?:
The customer is fulfilled by orders generated by the supplier. The supplier moves from being measured on DIFOT (delivery in full on time) to Instock and Working Capital levels at the customer. This requires the supplier to have access to the clients Stock on Hand level and sales offtake.
VMI provides significant supply chain advantages through preventing multiple safety stocks. The supplier gains flexibility of supply and a higher degree of certainty for manufacturing/sourcing. The customer should reduce inventory and increase in-stock, whilst reducing administration time.