5 Key Methods to Adopt Using Vendor-Managed Inventory


Operating a business can be challenging, including keeping track of your inventory to get everything done on time.

Using vendor-managed stock could be the answer to your inventory problems. A VMI could aid your business in many ways, enhancing your inventory. With vendor-managed inventory, you could have a smooth-running business in no time.

What Is Vendor-Managed Inventory?

You may need clarity on what vendor-managed inventory, or VMI, is. VMI is a method of inventory management in which a supplier commits to improving the distributor-to-buyer relationship. You may not know about VMI if you are new to the business world.

VMI has a different system than the traditional process. The conventional method of managing your inventory would be for you, as the buyer, to order goods or products from the supplier when and how you want them. This approach will help both parties cooperate toward their goals for efficient operations.

Vendor-managed stock can make the process of ordering inventory go a little smoother. VMI allows sellers and suppliers to share their order offers with buyers. The order suggestions can make ordering easy for the buyer.

What Are the Methods of Using Vendor-Managed Inventory?

There are several methods you should utilize when using vendor-managed inventory. Whether keeping your vendors up to date on your seasonality or demand, negotiating fees, or specifying goals for your company, you can do it all with VMI.

1. Keep Your Vendors Up to Date on Your Seasonality

One of the vital things you must do when using vendor-management inventory is to communicate with your supplier about seasonality.

Whether you get more active during the holiday season or the summertime, your supplier should know about it. Every business will likely experience a flux in their products at one point. You must let your supplier know when your busy season is so they can plan accordingly.

It is crucial to let them know when you will be less busy. Both of these things will help prevent overstock or shortages. You cannot run out of stock, but you always want to have enough.

2. Update Your Vendors with Changes in Demand

Just as you would update your vendor about your busy and less busy times of the year, you should also update them on quick changes in demand.

Once in a while, one of your products may lessen in popularity, causing a downward spike in sales. You should notify your supplier about these events as they could deliver too many products by mistake.

Too much product could set your budget off as you may need to sell more to cover the overage cost. You need to update your supplier on the popularity of your products so they know to deliver more or less to you the next time.

3. Negotiate Fees Up Front

One of the critical rules in all-around business is always bargaining the fees. Ensure you know just what fees you will be paying before paying them.

Outright discussing the costs before reaching a formal agreement can prevent surprise fees. If you run into a surprise fee, you can refer back to the initial negotiations to straighten things out.

4. Set Goals for Your Business

The supplier and the buyer need to specify their goals in the agreement. It would help if you established your expectations and goals before forming a formal agreement.

Both parties should agree on what a buyer-to-supplier relationship should look like. Pinpointing your goals can help you assess if your partner, the supplier or buyer, is keeping up their end of the deal.

When both sides are clear on goals and expectations from each other, everything is more likely to go smoother.

5. Share Your Data with the Vendor

You must share your information with a vendor. If you are uncomfortable with that, you may want to reconsider vendor-managed inventory, as sharing data is vital to a successful supplier and buyer relationship.

Vendors cannot read your mind, so you must communicate and share with them for your agreement to be successful. Real-time communication with your vendor or supplier can improve customer service satisfaction as there will be less mess with your inventory.

Customers love a smooth running operation. With real-time communication, that is feasible.


To conclude, the critical methods of using vendor-managed inventory could include updating your vendors with changes in demand or negotiating fees upfront. In any case, vendor-managed stock can be perfect for keeping your inventory up to par. Whether you want a smoother-running inventory or better customer service, VMI makes it possible.