Recently, AMR Research indicated that the global economic downturn and the need for improved inventory visibility and efficiency has led to a resurgence in vendor managed inventory (VMI) systems. As a result, many companies have turned to closer collaboration with key partners as a way to improve efficiency, reduce costs and drive a more profitable supply chain.
 
VMI today is quite simply not the same as it was just a few years ago. It is no longer a one-sided process that burdens the seller and benefits only the buyer. In its early days, VMI was widely hyped to dramatically reduce inventories, cut costs and improve efficiency across the supply chain. It did accomplish its goal to reduce supply chain costs; however, its key hurdle and reason for the lack of continued support was the absence of true collaboration.
 
Today, we see the traditional data intensive VMI process merging with the best of Collaborative Planning, Forecasting and Replenishment (CPFR) to form Collaborative VMI, a new process which shares more of the benefits across trading partners. This whitepaper examines how traditional VMI and CPFR have come together to form a more encompassing process. As the economy recovers and demand picks up, collaboration is key to ensure that service levels remain high while inventory levels remain lean.