Why do Vendor Managed Inventory? What are the Benefits?
"A well-structured VMI
agreement has the potential to provide benefits for both the supplier
and customer. If each partner concentrates on its core competences,
both firms can increase their productivity and profitability."
Effective Inventory Management, Inc.
"We are able to manage three times more business with our suppliers doing VMI than with our non-VMI suppliers."
Assistant VP of Marketing and eCommerce
"VMI changes the level of trust between supplier and distributor. We become closer to our customers."
Operations Project Manager
Vendor Managed Inventory (VMI) has consistently provided significant advantages for both the supplier and customer.
For the customer
For the customer, VMI results in increased profitability due to:
- Reduced inventory/increased turns
- Reduced administrative costs
- Fewer stock-outs or shortages
- Increased sales (for distributors and retailers)
Learn more about VMI benefits for the customer >
Business Results of Vendor Managed Inventory:
Two Year Cumulative Study
This two year cumulative study proves VMI is an effective tool to improve sales, increase inventory turns, and enhance customer service. The analysis concludes that cumulatively:
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- Sales INCREASED by 47%
- Inventory turns INCREASED by 38%
- Out of stocks REDUCED by 45%
For the supplier
For the supplier, VMI results in increased profitability due to:
- Increased sales
- Reduced operating costs
- Stronger customer relationships
Learn more about VMI benefits for the supplier >
For both parties
For both parties, VMI also provides:
- Better information for planning (e.g. demand visibility)
- A closer, more effective working relationship - both parties work together to sell more to and/or better serve end customers
The Keys to Success with VMI >