GlossaryEN1 min readUpdated: Jun 22, 2026

Vendor-Managed Inventory (VMI)

Vendor-Managed Inventory (VMI) is a supply chain collaboration model in which the supplier takes responsibility for monitoring and replenishing stock at the customer's location.

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Last updated: 22 June 2026Published: 19 June 2025

Source: https://en.wikipedia.org/wiki/Vendor-managed_inventory

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Logistics Concept

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Definition & Explanation

Vendor-Managed Inventory (VMI) is a supply chain collaboration model in which the supplier takes responsibility for monitoring and replenishing stock at the customer's location. Using shared data feeds – typically via EDI or integrated ERP systems – the supplier tracks consumption and inventory levels in real time and triggers replenishment autonomously, guided by pre-agreed parameters such as safety stock thresholds, order quantities, and demand forecasts. VMI is widely adopted in manufacturing and retail, where excess inventory ties up working capital and stockouts carry high operational costs. The fundamental shift from conventional purchasing: replenishment decisions rest with the supplier, not the buyer, giving the supplier direct visibility into demand patterns and a more stable order flow. For the customer, administrative ordering effort decreases and structural stockouts are avoided.