Materials
Vendor Managed Inventory (VMI)
Inventory management where the supplier monitors and replenishes stock for the retailer.
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Updated 2025-10-01
Definition
VMI enables suppliers to track inventory levels at customer locations and automatically replenish stock, improving efficiency and reducing stockouts.
Overview
Overview
VMI shifts responsibility for inventory management to the vendor, optimizing replenishment cycles and reducing administrative workload for the retailer.
Benefits
- Lower inventory holding costs
- Reduced stockouts and overstocks
- Improved supplier-retailer collaboration
Example
A beverage company monitors inventory at a retail chain and automatically ships products before shelves run empty.
Tags
#Vendor Managed Inventory#VMI#Inventory Management#Supply Chain#Replenishment
Related Terms
Inventory Management
Just-In-Time (JIT)
Reorder Point Formula (ROP formula)
