This whitepaper describes the best practices of VMI (Vendor Managed Inventory) process, where the seller manages inventory on behalf of the customer.
Vendor managed inventory (VMI) is a well-known concept in the business-to-business market. The vendor is responsible for analyzing and optimizing inventory flow for each of their customers. The difference is mainly related to the transfer of ownership of goods. In VMI, the vendor retains the ownership even after the goods are shipped to the customer location; the transfer of ownership to the customer happens only when the customer consumes the inventory at the customer location.
When the inventory remains at customer location (VMI), customers send inventory reports of all the items to the vendor so that replenishment orders can be created based on forecast provided by customers.