Vendor-Managed Inventory Flashcards

Which data sharing mechanism is most commonly used between suppliers and retailers in a VMI arrangement?

Answer: Electronic Data Interchange (EDI)

EDI enables automated, real-time data exchange of inventory levels and sales data between trading partners in VMI.

In VMI, what is the primary metric the vendor monitors to trigger replenishment?

Answer: Retailer's on-hand inventory levels

The vendor continuously monitors the retailer's on-hand stock levels and replenishes when inventory falls to a predefined threshold.

A VMI program reduces the 'bullwhip effect' primarily by:

Answer: Giving suppliers direct access to real demand data

Direct visibility into downstream demand eliminates demand distortion caused by sequential order batching across supply chain tiers.

Under a VMI agreement, who typically owns the inventory while it sits at the customer's location?

Answer: It depends on whether consignment terms are included

VMI does not automatically transfer ownership; consignment VMI keeps vendor ownership while non-consignment VMI transfers it upon delivery.

Which KPI is most appropriate for measuring vendor performance in a VMI program?

Answer: Fill rate / service level at the customer's location

Fill rate measures how well the vendor maintains adequate stock at the customer's site, which is the core VMI obligation.

A retailer implementing VMI with multiple suppliers should be most concerned about:

Answer: Sharing sensitive sales data with competing suppliers

Sharing point-of-sale data with multiple suppliers creates risk if competing vendors can see each other's sales performance or category insights.

In a VMI model, the supplier's ability to optimize their own production schedule improves because:

Answer: They have advance visibility into actual consumption patterns

Real-time consumption data lets suppliers level-load production and plan raw material procurement more accurately.