Vendor Managed Inventory


VMI is a type of supply arrangement between a buyer and a seller. The vendor is the seller, and in VMI agrees to take full responsibility for the inventory of items sold to the buyer. The buyer identifies space for the inventory, and specifies the maximum and minimum number of items, and then is free to use or sell the items. The vendor monitors the inventory, and replenishes it so that it never falls below the specified minimum number of items in good condition. When the buyer is a retailer, the space identified for the inventory can be retail store display and shelf space.