{"id":7256,"date":"2025-05-20T03:46:03","date_gmt":"2025-05-20T03:46:03","guid":{"rendered":"https:\/\/sblog.seebiz.com\/blog\/?p=7256"},"modified":"2025-05-20T03:46:03","modified_gmt":"2025-05-20T03:46:03","slug":"vendor-managed-inventory","status":"publish","type":"post","link":"https:\/\/sblog.seebiz.com\/blog\/vendor-managed-inventory\/","title":{"rendered":"What is vendor managed inventory? Is it right for your business?"},"content":{"rendered":"

1. Introduction<\/span><\/h1>\n

What\u2019s the biggest nightmare of any business?<\/span><\/p>\n

Having orders in line but not having enough inventory to fulfill them.\u00a0<\/span><\/p>\n

One of the main reasons for this is not having a particular or poor inventory management system in place. Around <\/span>43% of small businesses<\/span><\/a> either use manual tracking for their inventory or don’t track their inventory at all, which leads to operational challenges like stockouts, overstocking, longer lead times, order delays, etc. Fixing this alone can reduce up to<\/span> 10% of businesses\u2019 inventory costs.\u00a0<\/span><\/a><\/p>\n

Therefore, businesses always strive to find ways to fulfill their orders by minimizing the issues related to inventory. One approach that businesses use in this scenario is vendor managed inventory (VMI), in which the vendor is responsible for managing the inventory of the retailer or buyer. Due to its multiple benefits, businesses have shown tremendous interest in this. The VMI market is projected to grow from <\/span>$3.9 billion in 2023 to $6.3 billion by 2030 at a 5.6% annual growth rate.\u00a0<\/span><\/a><\/p>\n

Let\u2019s see if this approach is suitable for your business or not.<\/span><\/p>\n

What is vendor-managed inventory (VMI)?<\/span><\/h2>\n

Vendor-managed inventory (VMI) is a system in which a vendor or supplier is responsible for inventory management for a retailer or buyer. This means the buyer doesn’t place orders, but the vendor restocks the inventory based on demand forecasting.<\/span><\/p>\n

\"What<\/p>\n

Source<\/span><\/a><\/p>\n

How does vendor managed inventory work<\/span><\/h2>\n

Vendor-managed inventory doesn’t work like a traditional supply chain, where a buyer makes a purchase order PO, sends it to the Vendor, and then the vendor sends the goods.\u00a0<\/span><\/p>\n

In VMI, the buyer doesn’t make the purchase order; the vendor manages all the buyer’s inventory independently.<\/span><\/p>\n

Let\u2019s understand how it works.<\/span><\/p>\n