Vendor-Managed Inventory Alternative

Summary

This practice note discusses the operation, benefits, and challenges of vendor managed inventory (VMI). VMI, or supplier managed inventory, is a supply chain strategy. A VMI arrangement provides for a streamlined approach to inventory management and product order fulfillment pursuant to which the vendor (or supplier or manufacturer) manages a customer's inventory. The customer outsources to the vendor the responsibility of monitoring and replenishing its inventory levels.