Vendor Managed Inventory (VMI)

Question 1

Briefly, what is VMI?

Answer 1

It is where the supplier of a product has the responsibility for maintaining his stocks at your premise.

“It’s like giving Ocado the management of your fridge. When you run out of milk, Ocado is then responsible for replenishing supply”

Question 2

What is VMI profiling?

Answer 2

It is where the vendor collects data based on a consumers buying habits (eg, a Tesco Clubcard)

It has limitations though, as buyers habits don’t reflect actual consumption, so it can only forecast.

Question 3

What is VMI monitoring?

Answer 3

Where the actual consumption of items are logged.

It provides better information regarding the actual consumption but it requires a form of data capture within the home (eg, fridges with barcode readers)

Question 4

How can RFID tags be integrated into VMI?

Answer 4

RFID tags can be attached to items. When the item is consumed (or, for example, taken out of a fridge) an order for another one can be placed.

Question 5

What is a consigned inventory?

Answer 5

This is where the vendor retains ownership until consumption.

For example, in a hotel minibar the items only yours (paid for) once you have actually taken it

Question 6

What is a purchased inventory?

Answer 6

Where the customer assumes ownership of the material but the material is managed by the supplier