In Vendor Managed Inventory (VMI), inventory is held at which location?

In Vendor Managed Inventory (VMI), inventory is typically held at the supplier's premises. This arrangement allows the supplier to take responsibility for managing the inventory levels at the buyer's location. Under VMI, the supplier monitors the inventory levels, sales data, and demand forecasts to ensure that the right amount of product is available when needed. This system aims to enhance efficiency, reduce stockouts, and lower inventory holding costs, as the supplier has better visibility into the usage patterns and can adjust shipments accordingly.

Holding inventory at the supplier's premises allows for more flexible and responsive replenishment strategies since the supplier can optimize their own inventory management processes based on real-time data from the buyer. This collaborative approach can lead to improved relationships and communication between the supplier and the buyer, further streamlining the supply chain.