vendor managed inventory

Syllable breakdown

Dictionary meaning

a supply chain arrangement in which the supplier or vendor takes responsibility for monitoring and replenishing the buyer's inventory, using shared data on inventory levels and sales velocity to determine when and how much to deliver without requiring the buyer to place purchase orders; vendor managed inventory reduces transaction costs, improves replenishment speed, enables the supplier to optimise their own production scheduling, and reduces the bullwhip effect by giving upstream suppliers visibility into actual downstream consumption; it requires high levels of trust, data sharing, and systems integration between trading partners and is particularly common in grocery retail and fast-moving consumer goods sectors