Answer to Question #193306 in Management for Tanmayee

Question

You are buyer in one of the key real estate organisation M/s Brick Developers Pvt ltd.

a. You have been given to manage Inventory Management is one of the key activity which requires daily monitoring. Explain how vendor managed inventory can help your organization? How does it varies compared to stock less buying?

Answer 1

Benefits of the Vendor Management Inventory

First of all, the VMI has been identified as the best solution for different businesses when it comes to the management of the stock levels. It is therefore defined as an exercise of the inventory management where the manufacturer, who is always considered as the supplier of goods in this case, is held accountable for enhancing the catalogue held by the distributor. The M/s Brick developers limited chose the vendor inventory management as a way of managing the stoke levels since it has been highlighted as the best way when it comes to the management of the stock levels. The vendor managed inventory will work on improving the efficiency in the organization (Chen, 2021).

 It is efficient when it comes to handling the purchase orders automatically thus bringing about limited possibility of having any data errors. The presence of too much inventory in a given organization is costly whereas on the other hand inadequate inventory can lead to the delay in the customers’ orders. The VMI is considered as the exact needed balance of inventory which contributes positively to a given organization since it is supreme when it comes to the budget, the shelf space and even the customer satisfaction. In addition to that the vendor managed inventory will help the supplier in expecting demand as the vendor and business relationship grows (McLarney, 2019).

It will also play a major role in the making of data based decisions in the handling of the season or market trends. In relationship to the stockless purchasing of products which usually involves the buying of materials which are meant  be used by the given departments which tends to go against the idea of issuing the materials to the specific departments after they have been received into the stores, the vendor management inventory ensures that the retailer can only buy what they sell (Martín-Herrán, 2019).

References

De Giovanni, P., Karray, S., & Martín-Herrán, G. (2019). Vendor Management Inventory with consignment contracts and the benefits of cooperative advertising. European Journal of Operational Research, 272(2), 465-480. <span style="font-size:12.0pt;line-height:200%;font-family:&quot;Times New Roman&quot;,&quot;serif&quot;; background:white">https://www.sciencedirect.com/science/article/pii/S0377221718305666</span>

Cleary, S., & McLarney, C. (2019). Organizational Benefits of an Effective Vendor Management Strategy. IUP Journal of Supply Chain Management, 16(4). <span style="font-size:12.0pt;line-height:200%;font-family:&quot;Times New Roman&quot;,&quot;serif&quot;; background:white">http://search.ebscohost.com/login.aspx?direct=true&amp;profile=ehost&amp;scope=site&amp;authtype=crawler&amp;jrnl=09729267&amp;AN=140446502&amp;h=idPWm8CG3rnr8nWDZwsC44bOKul6ZONKEeEc5XjrYrRjQcpoXo7%2F4TJjcXm0yJx%2BguiEbcFE3KBBgwl3goiNDQ%3D%3D&amp;crl=c</span>

Fang, X., & Chen, H. C. (2021). Using vendor management inventory system for goods inventory management in IoT manufacturing. Enterprise Information Systems, 1-27. <span style="font-size:12.0pt;line-height:200%;font-family:&quot;Times New Roman&quot;,&quot;serif&quot;; background:white">https://www.tandfonline.com/doi/abs/10.1080/17517575.2021.1885743</span>