A Look To Vendor Managed Inventory For Steady Product
When a company has a solution that provides product to an end user, say a retailer, they will have many different products in their stores. As a retailer you may have hundreds or thousands of product offerings across a wide array of product types. What some retailers choose to do is work with suppliers under a vendor managed inventory agreement which empowers the supplier to be responsible for the ordering and fulfillment of product in the retailer's store. This is a win - win for both companies. The retailer is ensured good product flow and quality service (since it is in the best interest of the supplier to have product that moves) and the supplier is ensured dedicated shelf space and product placement since they are controlling the space.
Often times both parties enter into an agreement to have certain levels reached. For example, a retailer might sell a cash-wrap section of their store to a supplier, with the supplier guaranteeing a certain level of sales each month. The product category is already picked under this agreement so the retailer is ensured of regular, guaranteed revenue and the supplier benefits by creating a cash-wrap that moves enough product to cover the monthly minimums.
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