Vendor-Managed Inventory (VMI)
When retailers managed inventory, one of the methods for inventory control was to use some form of a trigger-point method replenishment program. That is, when an item in stock is depleted to the level of the trigger point quantity, a purchase order is placed on a vendor to replenish the item. In such systems, retailers make their own forecast and inventory control rules. Alternately, retailers will replenish on a fixed cycle i.e. once a week basis and order an amount to fill designated shelf space for an item. According to the International Mass Retail Association, over 60 percent of hard goods and almost 40 percent of soft goods are under replenishment programs managed by retailers. Although retailer-managed replenishment programs are expected to continue, there are also expected to be a substantial growth in vendor-managed inventory (VMI) that is continuous replenishment. With electronic data interchange (EDI) and point of sale data, vendors can be as aware of what is on the ret