Certified Supply Chain Professional (CSCP) Practice Exam

What is the primary objective of a Vendor Managed Inventory (VMI) relationship?

1. A structured supply chain alliance between customer and supplier

2. To allow customers to manage supplier inventories

3. To improve the efficiency of warehouse operations

4. A partnership focused solely on pricing negotiations

The correct answer is: A structured supply chain alliance between customer and supplier

The primary objective of a Vendor Managed Inventory (VMI) relationship is to create a structured supply chain alliance between the customer and supplier. In a VMI arrangement, the supplier is given the responsibility for managing the inventory levels at the customer's location. This strategic partnership is beneficial as it fosters closer collaboration between the two parties, allowing the supplier to have deeper insights into the customer's inventory needs and consumption patterns. By placing the responsibility of inventory management in the hands of the supplier, it enhances the alignment of supply and demand. This collaborative approach not only streamlines replenishment processes but also optimizes inventory levels, reduces stockouts, and can lead to cost savings for both parties involved. While the other options touch on significant aspects of supply chain management, they either misrepresent the core focus of VMI or narrow it down to specific functional areas rather than presenting it as a comprehensive partnership aimed at mutual benefits.