Simplify inventory management with vendor managed inventory (vmi)

Limited inventory shrinkage. Since VMI reduces inventory, there’s less of it to worry about. That means fewer cases of shrinkage due to manual clerical errors or stolen, lost, or damaged inventory.

Fewer stockouts. VMI establishes fluid, consistent product replenishment, meaning less uncertainty about reorders. This fine-tuned, automated process decreases the chances of stockouts.

Diminished costs. With VMI, planning, ordering, and inventory costs no longer burden merchants. They all fall to the vendor, supplier, or manufacturer.

Better sales and brand loyalty. Customers are more likely to buy your products if you’re a reliable, trustworthy ecommerce seller. Having stock when customers need it is critical to their retention. VMI also increases your staff’s product knowledge through frequent contact with vendor representatives. This helps get them the insights they need to answer customers’ questions.

When executed well, vendor managed inventory models can streamline operations, reduce financial errors, boost customer trust, and increase cash flow.
Disadvantages of vendor managed inventory
There are some disadvantages of vendor managed inventory that companies should know before entering into a partnership.

• 
  Possible analytics gap. Some vendors don’t do data analytics, but data is a huge part of VMI. Monitoring your inventory levels, customer behavior, and sales numbers — particularly during seasonal spikes and lulls — is crucial to ecommerce success. During initial discovery calls, confirm that your favored vendor has proven analytics capabilities.
  
• 
  Difficulty severing relationships. Deeply integrated relationships are great when business is humming along, but this also makes severing relationships especially challenging. Make sure your VMI contract takes this into account and you know exactly how to cut ties without causing legal difficulties.
  
•