Process of Vendor Managed Inventory can be defined as a mechanism where supplier makes the purchase orders depending on the demand info exchanged by the retailer or customers. This implies that the supplier will the demand creation and the completion, instead of the stores or buyers managing the inventory.

Beneath the typical business design an buy is placed towards the manufacturer when the product is necessary by the distributor. The products on hand plan is definitely maintained by the distributor as he is in control of the timing and size of the purchase being positioned. Creating the responsibility of personnel team, space and products on hand management, improved administration operate and conflict between responsibility ownership in the case of quality issue.

Under Vendor-Managed Inventory unit the purchase is made by the manufacturer without being the change of ownership of inventory. The inventory strategy is taken care of and created by the manufacturer as he will get the data that tell him about the distributor's sales and stock levels. This model removes the case of emerging discord in case of quality issues, save manpower, space and inventory management and administration act as sole responsibility is with the device supplier.

The goal of Vendor-Managed Inventory should be to align the business objectives and streamline source chain businesses for equally suppliers and the customers, through a streamlined approach to inventory supervision and order fulfillment. It involves cooperation between suppliers and their consumers (e. g. retailer, distributor, or item end user) which changes the traditional placing your order process.

This method works only if expectations will be clarified between organization and the supplier, they both have to agree on how to share information regarding the restocking in a well-timed and coordinated manner and keep their interaction channels open.