Vendor Managed Inventory (VMI), also known as Supplier Managed Inventory, is a logistics tool for 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 supplier- Replenishment and management of the warehouse is the supplier's responsibility- The supplier monitors the customer's inventory- The customer provides additional information to the supplier- The 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 great advantages to the customer.