Vendor-Managed Inventory (VMI) is a supply chain management practice where the supplier takes responsibility for managing the inventory levels at the customer's location. In VMI, the supplier monitors the customer's inventory levels, replenishes stock as needed, and ensures that the customer always has sufficient stock on hand without the customer needing to place specific orders.
While Vendor-Managed Inventory can offer many advantages, it may not be suitable for all supply chain relationships or industries. Successful implementation of VMI requires a high level of trust, transparency, and data accuracy between the supplier and the customer. It is essential to have clear agreements, performance metrics, and a well-defined VMI process to ensure its effectiveness in optimizing inventory management and improving supply chain efficiency.