Vendor management inventory, or VMI, is a strategic approach to procurement that can have a significant impact on the cost, control, and supply chain performance of an organization. In VMI, suppliers are proactively engaged in keeping the buyer’s inventory up-to-date, rather than relying on buyers to place orders for new stock. Through collaboration, the buyer and supplier create forecasts, agree to replenishment settings, and optimize inventory levels in order to meet customer demand. This efficient system ensures better product availability with less capital tied up in inventories, leading to improved bottom line results.