Vendor Managed Inventory: Exploring objectives, benefits and shortcomings of the business concept

In today's business ? highly competitive and hard to predict, modern methods of supply chain management have become an important tool to gain competitive advantage over competitors. Vendor Managed Inventory is one of them. VMI is a replenishment program in which the supplier has the right to control level of customer's inventory on the basis of demand orders and forecasts from the customer. Regarding strange rules of this kind of business game, so much different from traditional perception of the supplier-customer relationship, it is not so popular among European companies. But the benefits can be various and favourable. Basic advantage of VMI implementation is a reduction of the bullwhip effect. VMI can help also by reducing stock-outs, improving customer service, reducing inventory level and others. A Particular company can make a real profit thanks to the introduction of VMI but if, and only if the implementation proceeds in a well-considered way, preceded by a thorough planning. The work should give better understanding of the idea to the logistics managers and others interested in improvement of the overall functioning of the companies.

Studied Logistics at the Poznan University of Economics (Poland) and Business Studies at the University of Abertay Dundee (Great Britain), is currently working as a controlling specialist at Techem, Poland.