Question

Have you seen vendor managed inventories used? Describe where. Where they effective? Why? or Why not? What other applications would be a good situation for vendor managed inventories?

Answer 1

Yes, I have seen Vendor management Inventories used in Wal Mart. In Wal Mart the companies get the data from Wal Mart Information systems about the inventory levels and the rate certain goods are sold. From the available data, the companies send the goods to Wal Mart.

Where does VMI effective? Why?

VMI is used in all kinds of businesses- from restaurants to small retail shops, to large supermarkets to big manufacturing firms. The VMO model is used to ensure the availability of inventories when it is needed without spending the cost on excessive space or rooms. It is effective where the manufacturing facility or warehouse facility is relatively close to the location of suppliers. VMI approach is effective for the businesses as it reduces the inventory cost and reduces storage costs. Apart from reducing the cost, it helps the businesses to keep more room in their warehouses for other products.

Other applications that would be a good situation for VMI:

Other application of VMI can be Direct Store Delivery for the retail stores, where the suppliers send the products directly to the stores, not to the warehouse.