VMI – letting your vendors manage your inventory
Vendor Managed Inventory is a great way to outsource procurement tasks by entering into a contract with your supplier who will then take the responsibility for maintaining the inventory at your facility. These are agreements that take a step past traditional consignment agreements. The primary difference is the client is billed when the materials are delivered not when they are being consumed or issued.
VMI is becoming a popular methodology employed by many larger firms who have decided to focus on their core competency and have made the choice the outsource those tasks that don’t fit within their primary focus. This is especially true for distribution houses who are happy to outsource relatively inconsequential tasks such as replenishing their cheaper products so they avoid being bothered by the MRO tasks of inventory for these low ticket items.
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