What is vendor-managed inventory (VMI)? | Definition from TechTarget

▤ Summary

Before entering into a VMI relationship, the retailer and supplier agree on certain metrics or key performance indicators (KPIs) that help both parties make mutually beneficial decisions about the stock. VMI also reduces stockout risks, making it less likely the retailer will lose achievable revenues from being unable to meet customer demand. VMI can present challenges in communication, cultural resistance, and setting clear lines of responsibility. When multiple vendors are involved, retailers find it burdensome to manage the incoming inventory from all of them. It also enables the vendors to proactively and quickly replenish the retailers stock, driving their own continuous sales and revenues.

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