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E1: 42I: Vendor Managed Inventory (VMI) (Doc ID 2197900.1)

Last updated on JULY 14, 2021

Oracle Outbound Inventory Management is an embedded solution that enables suppliers to perform Vendor Managed Inventory (VMI) and Consigned business processes. Vendor Managed Inventory is a procurement and planning tactic in which company delegates the key inventory management functions to it's suppliers. In normal business the customer keeps monitoring the inventory levels at his store/warehouse and procures inventory by creating purchase orders with his supplier, where as in VMI, these inventory management functions are delegated to the supplier. So, the supplier assumes the responsibilities of monitoring the inventory levels at customer's location and creating orders to replenish the used or consumed inventory to maintain the inventory levels.

The main process involved in the VMI Cycle are as below:

  • Supplier and customer establish an agreement for shipping and maintaining inventory at the customer’s location. The agreement dictates the terms like agreement qty, agreed price, agreed inventory levels to be maintained at customer’s location, when and how to replenish the inventory at customer's location.
  • Supplier ships inventory to the customer’s location along with the invoice.
  • Customer acknowledges receipt of the inventory.
  • Customer consumes the inventory and reports the consumption to the supplier
  • Supplier replenishes the inventory at the customer’s location based on the agreed inventory levels and the replenishment method.

This document provides details on Vendor Managed Inventory including an overview, details on setup, VMI Agreement Management, VMI Cycle and frequently asked questions on VMI.


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