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VENDER MANAGED INVENTORY Name: Grade Course: Tutor`s Name: (15 April 2011) Vender Managed Inventory The use of Vender Managed Inventory (VMI) is gaining acceptance by manufacturers, distributors, producers and retailers in many industries. Initially, everyone tried it as an experiment but currently, it is preferred globally. Vender Managed Inventory is a way of optimizing supply chain performance where the manufacturer maintains the distributors inventory levels (Brand, 2009). The manufacturer can access the information about distributor`s inventory making him able to make purchase orders. If the manufacturer realizes that the inventory levels are dropping, he make a purchase order and ships the goods to the distributor. The manufacturer can view the stock that the distributor carriers and the point of sale data. Therefore, he creates the inventory plan and generates the order. Many factors should be considered before arranging the partnership between the distributor and the manufacturer regarding VMI. The benefits of such an arrangement are many. There are benefits that accrue to both the distributor and the manufacturer. There are also benefits that are specific to the distributor and to the manufacturer. Apart from this, there are losses, which might occur in such an arrangement. This calls for critical analysis of the several factors before any serious decision is made. Benefits. The manufacturer receives information about distributor`s sales hence he is able to tell his stock level (Saxena, 2009). This information is normally passed via electronic data such as (electronic data interchange) EDI or the internet. The probability of incorrect data is reduced as communication is from computer to computer. The relationship between the manufacturer and the distributor is improved as they work closer together hence strengthening ties between them. The two are also provide better service to the consumer since the correct item will be in stock when he needs it. The other advantage of the model is that the buyer is guaranteed with the maximum quality of the products that they have purchase thus giving them quality for there money. The timing of Purchase Orders is stabilized since they are generated on predefined basis. VMI shortens the supply chain. The manufacturer does not need to use promotional efforts to win the distributer. The two work together. The results of VMI are that it reduces inventory and stock outs. Supply chain management (SCM) is the management of the system that interconnects businesses that provide goods and services to consumers. It involves planning supply chains, which range from movement and storage of raw material, managing the inventory, and ensuring that the final products reach the consumers. A lean Supply chain process is a properly designed supply chain that has eliminated waste activities. Waste in a supp...