Certified Supply Chain Professional (CSCP) Practice Exam

What does a vendor-managed inventory relationship typically enhance?

1. Supplier's operational control

2. Customer's inventory insights

3. Customer's billing cycle flexibility

4. Supplier's marketing capabilities

The correct answer is: Customer's inventory insights

In a vendor-managed inventory (VMI) relationship, the primary enhancement is to the customer’s inventory insights. VMI involves the supplier taking responsibility for managing the inventory levels at the customer’s location. This arrangement leads to improved visibility into stock levels, consumption patterns, and demand forecasts for the customer. As the supplier monitors inventory data and sales trends, they can make informed decisions about inventory replenishment. This process allows the customer to benefit from optimized stock levels, reduced stockouts, and better alignment with demand, ultimately leading to enhanced operational efficiency and lower costs associated with inventory management. While operational control resides more with the supplier in a VMI arrangement, the real advantage to the customer lies in the insights gained from having real-time inventory data and analytics provided by the supplier. Thus, the relationship is designed to empower the customer with better information regarding their inventory needs.