Vendor-Managed Inventory: Using Trust, Information and Relationships to Improve Operational Efficiency

Sponsored By WorldTelemetry, Inc.

Topics:

Finance & Risk Management > Supply Chain

Technology > IT Management

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Abstract:

Companies that purchase fuels, chemicals, solvents and other products often have to make a choice: either reduce costs by keep­ing inventory levels low, risking run-outs and lost sales, or keep enough surplus inven­tories on hand to be prepared for unforeseen spikes in product demand, which tends to drive up inventory costs and market price risks.

Vendor-managed inventory is a system by which the distributor (seller) of products monitors and manages a custom­er's (buyer's) inventory levels, often through a system of automated data collection and analysis. When product inventories drop below a specified level, the distributor dispatches a delivery based on previously agreed-upon criteria.

By utilizing VMI, buyers are able to have the inventory available as soon as the need arises, without incurring the costs and risks of keeping a large surplus on hand. Buyers are assured of a reliable supply of product while avoiding higher than necessary inven­tories and the associated cost of capital.

DETAILS

Sponsored by: WorldTelemetry, Inc.

Posted: July 29, 2008

Length: 5 pages

Format: PDF (163 kb)

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