Vendor-managed inventory (VMI) involves which arrangement?

Vendor-managed inventory (VMI) involves which arrangement?

• A. Supplier manages inventory levels at the customer's site
• B. Customer manages supplier orders
• C. Manufacturer ships to retailers with no coordination
• D. Logistics provider handles only transportation

Answer: (D)

In vendor-managed inventory, the supplier takes responsibility for maintaining the customer’s inventory levels, typically by managing stock at the customer’s site and replenishing it based on data provided by the customer. The supplier monitors usage or point-of-sale data and decides when and how much to order, keeping the on-site inventory aligned with demand. This shared data and delegated replenishment flow is what distinguishes VMI from other setups. Think of it as the supplier owning and controlling the inventory at the customer's location, rather than the customer managing the supplier’s orders. It also isn’t just about moving goods—the role includes monitoring stock, initiating replenishments, and ensuring product availability. So the arrangement where the supplier manages inventory levels at the customer’s site best describes VMI.

In vendor-managed inventory, the supplier takes responsibility for maintaining the customer’s inventory levels, typically by managing stock at the customer’s site and replenishing it based on data provided by the customer. The supplier monitors usage or point-of-sale data and decides when and how much to order, keeping the on-site inventory aligned with demand. This shared data and delegated replenishment flow is what distinguishes VMI from other setups.

Think of it as the supplier owning and controlling the inventory at the customer's location, rather than the customer managing the supplier’s orders. It also isn’t just about moving goods—the role includes monitoring stock, initiating replenishments, and ensuring product availability. So the arrangement where the supplier manages inventory levels at the customer’s site best describes VMI.