VMI 101: What Is VMI? How Can It Benefit You?

VMI stands for Vendor Managed Inventory. It’s the process in which a business entrusts the management of their subcomponent inventory to their supplier. This can be done in a number of ways, but ultimately it means the supplier takes responsibility for maintaining inventory based on jointly established objectives.

What Benefits Does VMI Offer?

• Increased supply chain efficiency – Simplify the complex process managing many loose components and decrease the risk for human error or oversight by utilizing automated data transfers and MRP forecast based shipment planning.
• Decreased administrative effort – Save time by avoiding the back and forth calls, POs and invoices – rely on data exchange to share your production schedule and inventory levels, and rely on your vendor to ensure your inventory levels are always right.
• Goodbye lead times – VMI ensures you will receive the materials you need exactly when you need them – when you’re ready to ship, the inventory your vendor manages will be there.
• Reduce SKUs – With VMI, you can condense 5-25 SKUs down to a single SKU through vendor kitting. You can rely on your vendor to source your materials for kitting or to kit your owned materials. Either way, when you no longer have to worry about these relatively low cost, loose items, you’ll save time, money and frustration.
• Reduction in your total cost of ownership – Save on printing, warehousing, administration and freight costs, lowering your overall cost of ownership. 

If you’re interested in learning more about the benefits of vendor managed inventory, check out this story on a nationwide home appliances brand that has utilized our VMIEdge solution to meet their increased demand throughout the COVID-19 pandemic.