What is Vendor Management Inventory?

The full name of VMI is Vendor Managed Inventory, which is vendor managed inventory.

It is an inventory operation model in a supply chain environment. In essence, it turns a multi-level supply chain problem into a single-level inventory management problem. Compared with replenishing goods according to orders issued by traditional users, traditional practice. VMI uses actual or predicted consumer demand and inventory as a solution for market demand forecasting and inventory replenishment. That is, by obtaining consumer demand information from sales data, suppliers can plan more effectively and respond more quickly to market changes and Consumer demand. Upstream companies such as suppliers manage and control the inventory of downstream customers based on their downstream customers' production operations and inventory information.

Overview of supplier managed inventory implementation

1. In recent years, in order to reduce inventory costs and integrate supply chain resources, more and more companies have begun to try a new supply chain management model - vmi, especially in retail. Retailers have long been subject to the "bullwhip effect" and selling certain products for long periods of time. In order to ensure the continuity of product sales, retailers have always managed product inventory separately and bear inventory costs separately. Products have been supplied by several suppliers. In order to ensure the core competitiveness of enterprises in marketing, strengthen cooperation between enterprises, reduce costs, suppress the bullwhip effect, and reintegrate enterprise resources, retailers decided to implement the VMI supply chain strategy and conduct alliances between enterprises.

2. The early preparation stage of VMI is mainly reflected at the strategic level, including what form of VMI to adopt, selecting a certain supplier as its implementation partner, and formulating mutual contractual relationships and supply goals.

The implementation phase of supplier inventory management is the most important and complex phase. Mainly reflected at the tactical level, including changing the organizational structure to adapt to supplier-managed inventory, the buyer's company and its cooperative suppliers jointly form a working team, set up some new functional departments, and how the entire supplier-managed inventory works specifically.

3. The evaluation of VMI is to determine some economic indicators based on the goals set by both companies before implementing VMI, and compare them before and after implementation. If the expected effect is achieved, it will enter the full implementation stage; otherwise, it will return to the implementation stage of VMI and make improvements and improvements until it passes the full implementation stage of VMI.