Wednesday, 18 November 2015

What are the Benefits of the Vendor Managed Inventory (VMI) System?

The Vendor Managed Inventory System, known as VMI, is a method of supply chain management. The system sends the sales information from the store to the supplier, where the supplier will then manage the reorder process. This is a system that works to reduce the inventory level for the company and costs are reduced as a result. It is beneficial to the company as it is able to forecast demand more accurately.

There are many benefits for the links in the supply chain. Manufacturers may benefit from:
  • Improving planning and scheduling
  • Forming closer ties with the customer
  • Providing more accurate information on the market
  • Reducing the raw and finished inventory investments
Retailers may benefit from:
  • Improving market information
  • Optimising the product mix
  • Reducing admin replenishment costs
  • Reducing the stock-outs with higher inventory turnover
  • Reducing transfer costs

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