CPIM Practice Exam

What does supplier access to customer inventory data in VMI help optimize?

1. Inventory levels and cost efficiency

2. Product delivery times

3. Customer relationships

4. Sales forecasting accuracy

The correct answer is: Inventory levels and cost efficiency

Supplier access to customer inventory data in Vendor Managed Inventory (VMI) primarily helps in optimizing inventory levels and cost efficiency. In a VMI arrangement, suppliers are granted visibility into the customer's inventory levels, allowing them to monitor stock quantities and understand the purchasing patterns of the customer. With this information, suppliers can better manage inventory replenishment, ensuring that stock levels are neither too high nor too low. This optimization of inventory levels directly contributes to cost efficiency by reducing the costs associated with overstocking (such as handling and storage expenses) and minimizing stockouts, which can lead to lost sales and customer dissatisfaction. By having real-time data and insights into the inventory, suppliers can align their production and shipping schedules more effectively, ultimately improving the overall supply chain performance. The other options, while important in their own rights, do not capture the primary benefit of inventory data access in the context of VMI as effectively as inventory levels and cost efficiency do.