What is a key feature of "vendor-managed inventory" (VMI)?

What is a key feature of "vendor-managed inventory" (VMI)?

• A. The buyer manages their own stock levels
• B. The supplier oversees inventory levels based on usage
• C. The system operates without any supplier involvement
• D. The inventory is held at a third-party warehouse

Answer: (B)

In a vendor-managed inventory (VMI) system, the key feature is that the supplier oversees inventory levels based on the buyer's usage. This model shifts the responsibility of managing inventory from the buyer to the supplier, who monitors stock levels in real-time and makes decisions about inventory replenishment. By doing so, the supplier can reduce stockouts and optimize inventory levels, responding to the buyer's consumption patterns more effectively. This collaborative approach enhances supply chain efficiency and can lead to cost savings for both parties, as the supplier's insight into inventory flows allows for better planning and reduced waste. The role of the supplier in VMI means they have access to sales and inventory data, enabling them to make informed decisions about stock levels and reorder points, ultimately streamlining the supply chain process. This relationship fosters a partnership where the supplier is more engaged in the success of the buyer's operations.

In a vendor-managed inventory (VMI) system, the key feature is that the supplier oversees inventory levels based on the buyer's usage. This model shifts the responsibility of managing inventory from the buyer to the supplier, who monitors stock levels in real-time and makes decisions about inventory replenishment. By doing so, the supplier can reduce stockouts and optimize inventory levels, responding to the buyer's consumption patterns more effectively. This collaborative approach enhances supply chain efficiency and can lead to cost savings for both parties, as the supplier's insight into inventory flows allows for better planning and reduced waste.

The role of the supplier in VMI means they have access to sales and inventory data, enabling them to make informed decisions about stock levels and reorder points, ultimately streamlining the supply chain process. This relationship fosters a partnership where the supplier is more engaged in the success of the buyer's operations.