Inventory is one of those necessary evils that every manufacturer seeks to control. The goal is to not sit on excess raw material, tying up large amounts of cash and space, but also not run short, halting production and losing time and money. Having the bare minimum amount of inventory to sustain production is the delicate balance of lean supply chain management.
Enter the concept of vendor-managed inventory (VMI).
For those not familiar with vendor-managed inventory, it’s a business model in which the manufacturer provides a forecast to the supplier of components needed in the manufacturing process, and the supplier takes the responsibility for maintaining an agreed-upon inventory of the item.
