Under the typical business model:
When a distributor needs product, they place an
order against a manufacturer. The distributor is in total
control of the timing and size of the order being placed. The
distributor maintains the inventory plan.
Vendor Managed Inventory model:
The manufacturer receives electronic data (usually
via EDI or the internet) that tells him the distributor’s sales
and stock levels. The manufacturer can view 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.
Vendor Managed Inventory (VMI)