Adopting a vendor-managed inventory system can lead to which advantage?

Adopting a vendor-managed inventory system can lead to which advantage?

• A. Increased autonomy for suppliers
• B. Better inventory management and control
• C. Reduction in customer-supplier collaboration
• D. Higher production costs

Answer: (B)

Choosing to adopt a vendor-managed inventory (VMI) system enhances inventory management and control for several reasons. Primarily, VMI allows vendors to take greater responsibility for maintaining the inventory levels of their products at the customer’s location. This shift in responsibility often leads to a more accurate prediction of inventory needs, as suppliers have access to real-time sales data and inventory levels. With the supplier managing the inventory, they can make informed decisions about stock replenishments, thereby reducing the likelihood of stockouts or overstock situations. This system minimizes the risk of excess inventory, which ties up capital, and enhances the ability to respond to fluctuations in demand more effectively. Additionally, by closely monitoring inventory levels and turnover rates, suppliers can optimize their production schedules and logistics, further enhancing efficiency. Overall, adopting a VMI system fosters a proactive approach to inventory management, resulting in more streamlined operations and better alignment between supplier capabilities and customer needs.

Choosing to adopt a vendor-managed inventory (VMI) system enhances inventory management and control for several reasons. Primarily, VMI allows vendors to take greater responsibility for maintaining the inventory levels of their products at the customer’s location. This shift in responsibility often leads to a more accurate prediction of inventory needs, as suppliers have access to real-time sales data and inventory levels.

With the supplier managing the inventory, they can make informed decisions about stock replenishments, thereby reducing the likelihood of stockouts or overstock situations. This system minimizes the risk of excess inventory, which ties up capital, and enhances the ability to respond to fluctuations in demand more effectively.

Additionally, by closely monitoring inventory levels and turnover rates, suppliers can optimize their production schedules and logistics, further enhancing efficiency. Overall, adopting a VMI system fosters a proactive approach to inventory management, resulting in more streamlined operations and better alignment between supplier capabilities and customer needs.