What is Vendor Management inventory (VMI) ?
The term VMI means it is an inventory management technique in which the manufacturer is responsible for optimizing the inventory levels of distributor. We can say that manufacturer can have access to the inventory level of distributor & can generate purchase orders. In vendor managed inventory technique the manufacturer receives electronic data regarding the sales & inventory levels of distributor through Electronic Data Interchange (EDI) or the internet,plans the inventory & place orders. While under traditional business model the distributor has to place an order against a supplier when its inventory level is low. The distributor has the full authority to check & plan the inventory level.
The benefits of VIM are many, it may include better inventory accuracy,inventory forecasting & service. It reduces the inventory headache of distributor.
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