CPIM Practice Exam

What is vendor-managed inventory (VMI)?

1. Customer-managed stock system

2. Supplier maintains inventory using customer data

3. An independent inventory management system

4. A third-party logistics solution

The correct answer is: Supplier maintains inventory using customer data

Vendor-managed inventory (VMI) is a supply chain practice where the supplier or vendor is responsible for maintaining the inventory levels for the customer. In this arrangement, the supplier takes on the management of stock based on shared data about sales and inventory levels provided by the customer. This system allows vendors to optimize inventory levels, ensuring that the right products are available when needed while reducing the risks of stockouts or overstock situations. By using customer data regarding sales patterns and inventory turnover rates, the supplier can make more informed decisions about when to replenish stock and in what quantities. This collaborative approach can lead to improved efficiency, cost savings, and better relationships between suppliers and customers. VMI also shifts the responsibility of monitoring inventory from the customer to the supplier, which can free up resources for the customer to focus on other areas of their business.