Vendor Managed Inventory versus Consignment Inventory.

Inventory management has two very different, but effective methods: vender managed blood line, and consignment enrolment. A company may choose to expend either of these two methods to manage stock-taking. If a company is satisfactory to manage inventory, they will be better able to land the companys capital to the fullest extent. The following paper will identify the differences between the two as well as identify what character of company is best suited for each method.

Definition.

Vendor managed inventory (VMI) is a means of optimizing sum chain performance in which the shaper is responsible for maintaining the distributors inventory levels. The manufacturer has access to the distributors inventory info and is responsible for generating purchase orders. Under VMI the manufacturer receives electronic data (usually EDI or via the internet) that tells him the distributors sales and stock levels. The manufacturer can have every item that the distributor carriers as well as true point of sale data. The manufacturer is responsible for creating and maintaining the inventory plan. Under VMI, the manufacturer generates the order, not the distributor. (Williams, 1996).

Consignment inventory (CI) is when the supplier places inventory at a customers location and retains ownership of the inventory. Payment is not made until the item is actually sold.



In other words, the supplier places some of his inventory in his customers possession (in their store or warehouse) and allows them to sell or consume directly from his stock. The customer purchases the inventory only after he has resold or consumed it (Williams, 1996).

Set up of design/Software.

VMI software application manages stock levels from various locations. With an endless supply of available stock, VMI software provides companies with complete list of inventory. Comergent is one of galore(postnominal) companies which provide VMI software murder and training (Comergent.com). On average, implementation of...

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