Vendor Managed Inventory (VMI) is a supply chain management strategy where the supplier is responsible for monitoring and replenishing inventory levels for their customer. In a VMI system, the supplier has access to the customer’s inventory levels and uses this information to manage the inventory replenishment process.

The supplier is responsible for determining when and how much inventory needs to be replenished, and they are also responsible for delivering the inventory to the customer’s location. The customer benefits from VMI by reducing the need to manage inventory levels themselves and by improving supply chain efficiency.

VMI requires a high level of collaboration and communication between the supplier and the customer, as the supplier must have access to the customer’s inventory and sales data to effectively manage inventory levels. This collaboration can lead to improved forecasting and planning, reduced lead times, and improved customer satisfaction. VMI is commonly used in industries such as retail, healthcare, and manufacturing, where efficient inventory management is critical to success.