Vendor Managed Inventory (VMI), also known as Supplier Managed Inventory, is a logistics means of improving supply chain performance where the supplier has access to the customer's inventory and demand data. How VMI works:The customer's warehouse is monitored by the supplierFilling and managing the warehouse is the supplier's responsibilityThe supplier monitors the customer's inventoryThe customer provides the supplier with additional informationThe best possible replenishment quantity (as small as possible but as large as necessary) and also the timing are determined by the supplier.Since planning and scheduling tasks are eliminated and the material does not become the customer's property until it is removed from the warehouse, VMI offers the customer great advantages.