Vendor Managed Inventory (VMI)

When manufacturers find themselves with excess, unused inventory, it can have a ripple effect on the company’s balance sheet. Having too much inventory means needing more warehousing space, which can turn what should be a valuable asset into something that loses value as soon as it arrives. Striking the right balance—keeping just enough inventory on hand to keep production running smoothly—is crucial for effective supply chain management.

While there are a few different variations of VMI, they all operate under the same principle: by ordering materials only when they are needed, businesses maximize efficiency, minimize costs, reduce stock outs, and increase profits.