Vendor-managed inventory (VMI) is a supply chain practice where the vendor takes responsibility for managing and replenishing inventory at the retailer or customer’s location. This approach fosters collaboration between suppliers and retailers, as the vendor monitors inventory levels and decides when to restock based on agreed-upon inventory thresholds. By doing so, VMI enhances efficiency in inventory control and can lead to reduced stockouts, improved service levels, and lower overall inventory costs.
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