Datalliance - Vendor Managed Inventory Service


What is Vendor Managed Inventory (or VMI) ?
Vendor Managed Inventory simply means the vendor (the Manufacturer) manages the inventory of the distributor. The manufacturer receives electronic messages, usually via EDI, from the distributor. These messages tell the manufacturer various bits of information such as what the distributor has sold and what they have currently in inventory. The manufacturer reviews this information and decides when it is appropriate to generate a Purchase Order.

To further explain Vendor Managed Inventory, lets look at an example. Prior to implementing a VMI program, a Widget Distributor operated under a non-VMI business model. It created an inventory plan, then monitored and controlled it's own inventory levels. When the company felt it needed more inventory, they would place a Purchase Order against the manufacturer.

Under a Vendor Managed Inventory setup, the Widget Manufacturer would setup the Distributors inventory plan. The Manufacturer would then monitor the Distributors inventory levels, keeping track of the sales and the current inventory level. Once the Manufacturer believed the Distributors inventory levels were too low, the Manufacturer would generate the Purchase Order and ship the product to the Distributor.  Vendor Managed Inventory gives the control over the inventory to the Manufacturer.

 Vendor Managed Inventory promotes a strong partnership between the Manufacturer and the Distributor. Click on the links below to learn more about setting up a VMI program.

How does the Manufacturer monitor the Distributors inventory?

Does this effect the transfer of ownership?

Why would a company want to be involved in a Vendor Managed Inventory program?

    How to start up a Vendor Managed Inventory program.

Some of the steps to consider when starting a VMI program

Additional Supply Chain Resources.

Do you have any questions about Vendor Managed Inventory?


The information on this website is the opinion of the webmaster. It should NOT be used as the sole information source when implementing a VMI program. If you are starting or are currently involved in a Vendor Managed Inventory program, we strongly recommend that you work with a qualified professional.
For additional Vendor Managed Inventory information, please see