Simplify inventory management with vendor managed inventory (vmi)

Simplify inventory management with vendor managed inventory (VMI)

Adobe Communications Team
09-30-2022

Ecommerce has made business more competitive than ever. Almost every department — from sales to marketing to customer service and more — has had to adjust. Warehouse management has gotten more complicated too because companies need to keep up with heavy back-end management such as purchasing, storing, and tracking inventory.
One way to organize and streamline your inventory management is to adopt vendor managed inventory (VMI). VMI can dramatically reduce the effort and anxiety associated with inventory management, freeing up time for business owners and operations managers to tackle more strategic projects.
This post will explain:

• 
  What vendor managed inventory is
  
• 
  How vendor managed inventory works
  
• 
  Advantages of vendor managed inventory
  
• 
  Disadvantages of vendor managed inventory
  

What is vendor managed inventory?
Vendor managed inventory is a partnership between a company purchasing products (the “buyer”) and a supplying vendor in which the vendor agrees to maintain a certain inventory level at all times. VMI can benefit both parties — the vendor has a steady income stream and the buyer has a stable product supply.
A common difficulty is that buyers don’t always know how to find a good vendor for VMI. That's when third-party logistics buyers can help. These companies combine data from suppliers and sellers to improve the supply chain process.
Third-party buyers can also help in emergency situations. For example, if vendors find that items are out of stock, a third-party buyer can contact other vendors in its network to get product to the buyer that needs it.
Third-party buyers also work with vendors to recommend new product orders to buyers. This ensures that vendors don’t have unneeded inventory but still have enough to keep up existing agreements with other buyers, matching supply and demand gaps.
Now that you understand what VMI is, let’s dive deeper into how the VMI process works.