What is vendor-managed inventory (VMI)?

Why it matters for online retailers

VMI can take reordering work off your team and reduce stock-outs, because the supplier sees demand as it happens. The trade-off is giving the supplier visibility of your data and some control over your stock.

How VMI works

• Retailer and supplier agree minimum and maximum stock levels for each product.
• The retailer shares stock levels and sales, often daily.
• The supplier sends stock when levels approach the minimum.
• Both sides review performance regularly.

Pros and cons

• Pros: fewer stock-outs, less purchasing admin, suppliers can plan production.
• Cons: you depend on the supplier's judgement, you share commercial data, and it suits large, stable lines better than fashion or one-off products.

VMI in 3PL operations

Some 3PLs manage replenishment on behalf of their clients in a similar way, using agreed stock levels and the client's sales data.

How StoreFeeder handles it

StoreFeeder doesn't run vendor-managed inventory for you, but it gives you the data that most replenishment decisions need: live stock levels, sales history, supplier lead times, minimum order quantities and stock forecasting.

Read more about StoreFeeder inventory and stock forecasting.

What is vendor-managed inventory in simple terms?

Your supplier watches your stock levels and sends more when you need it, instead of you placing purchase orders.

Who owns the stock in VMI?

It depends on the agreement. Often the retailer owns it once delivered, but in consignment arrangements the supplier owns it until it sells.

Is VMI right for small retailers?

It works best for steady, high-volume lines with a trusted supplier. Most smaller retailers get more from good reorder points and forecasting.