Advantages of Vendor Managed Inventory

06 Dec

Ideally, vendor managed inventory is when the suppliers manage the inventory of the customers using data from customers or with the use of physical accounts. In most cases when the inventory levels get replenished the vendor usually stocks up the inventory of the customers. Some of the benefits that are associated with the vendor managed inventory system are briefly highlighted below.

The use of vendor managed inventory helps to give vendors more control so that it is easy for them to forecast demand. It is therefore easy for them to make frequent deliveries as well as practice lean manufacturing. It is easy to meet demand as well as reduce things like inventory costs as well as errors.

With the use of vendor managed inventory the relationships between the customer and the vendor are strengthened. Since the suppliers provide quality service, it is easy to ensure that the relationship of the customer and supplier becomes stronger. Great relationship improves communication and this is something that becomes beneficial for both parties.

Using of this method ensures that there is more vendor control and that waste is eliminated. Since there is more accurate planning, there is less probability of obsolete stock and the cost of storing excess inventory is also reduced. Overall, there is a reduction of stock shortages as well as high delivery cost of the shipment.

Things like reduction of stock shortages reduce factors that are related to uncertainty. Customers are bound to get devastated when the right products are not in stock when they need them. In the long run this will be costly for the supplier since overstocked items will have storage costs and there is loss since there will be no sale when there is no stock. Check this website to learn more.

With the fact that the supplier knows what to stock and when, there is increase of sales which is something that benefits the supplier. Having the right products will boost the customer service and this is bound to help create customer loyalty. In the long end, there is more returning customers which means that there will be more sales over time. Check this article for more info.

Keeping track of moving inventory is something that is hard to do especially if you are supplying products to retailers. Vendor  managed inventory comes in handy in such cases since it helps to manage what is available and defer responsibility. There is therefore less cost associated with doing such tasks, reduction of admin work allowing the business to focus on more important aspects of the business. Visit for other references.

* The email will not be published on the website.
This site was built using