Vendor Managed Inventory (VMI) is a supply chain practice where the supplier or vendor assumes responsibility for managing the inventory levels of their products at the customer’s location. Instead of the buyer placing purchase orders, the vendor monitors inventory data and replenishes stock based on agreed-upon service levels and demand forecasts.This approach helps reduce stockouts and excess inventory by improving replenishment accuracy and visibility. VMI fosters closer collaboration between suppliers and buyers, streamlining inventory management processes and lowering operational costs for both parties. It also enables more responsive supply chains that can quickly adjust to changes in demand.
