Vendor Managed Inventory (VMI) Software

What Is Vendor Managed Inventory Software?

Vendor managed inventory software, or supplier assisted inventory management (SAIM), allows the supplier to assume many of the duties related to maintaining the buyer’s inventory. Rather than place all of the responsibilities of the supply chain planning system onto the customer, vendor managed inventory agreements establish a collaborative relationship between vendors and manufacturers or retailers. In this case, the buyer uses the software to keep the supplier aware of how much inventory should be available at the buyer’s location at all times, and the supplier uses the software to monitor that inventory and replenish it when necessary, which makes VMI software a particularly useful addition to any supply chain management system.

VMI Features & Functionality

Using VMI software, requests are constantly moving back and forth between buyer and supplier. The buyer can immediately inform the supplier about product activity, sending electronic documents that report inventory, sales, and demand data, to name a few. The supplier can then reply with information and suggestions of its own, such as recommended replenishment quantities, advanced shipment notifications, and invoices.

Specific features associated with VMI software include:

Evaluating Vendor Managed Inventory Software

VMI software helps suppliers reduce lead times through increased visibility between supplier and buyer. It plays a crucial role in alerting the supplier when the customer is out of stock, so if buyers historically put in last-minute, rush, or disorganized orders, these systems can be particularly supportive in smoothing out that ordering and delivery process.

When purchasing vendor managed inventory software, consider the following criteria:

• What format/software do your customers use for their product activity reports?
• Is the VMI software customized/customizable to your industry’s product/inventory needs?
• Are you looking for business intelligence capabilities that will improve the SAIM process over time?
• Do you want a locally installed program, or a web-based Software-as-a-Service system?