Today, many firms are trying to concentrate on core competencies. They want to outsource tasks and activities when it is cost effective to do so. A popular way to outsource these procurement activities is a vendor-managed inventory (VMI) agreement. Here are the key elements to make it profitable and productive for both parties.
Under a VMI agreement, a supplier takes full responsibility for maintaining stock of its products at a customer's facility. VMI agreements differ from traditional consignment agreements in that the customer is billed for material when it is delivered, not when it is consumed or issued. When establishing a VMI agreement, the supplier and customer must agree on:
- The specific products that will be covered under the VMI ...
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Today, many firms are trying to concentrate on core competencies. They want to outsource tasks and activities when it is cost effective to do so. A popular way to outsource these procurement activities is a vendor-managed inventory (VMI) agreement. Here are the key elements to make it profitable and productive for both parties.
Under a VMI agreement, a supplier takes full responsibility for maintaining stock of its products at a customer's facility. VMI agreements differ from traditional consignment agreements in that the customer is billed for material when it is delivered, not when it is consumed or issued. When establishing a VMI agreement, the supplier and customer must agree on:
- The specific products that will be covered under the VMI ...
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