VMI Systems

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WISE by Royal 4 Systems is a rules-based warehouse management (WMS) system that is able to support a number of industries, including 3PL, automotive, food and beverage and industrial machinery. WISE helps users manage core wa...Read more about WISE

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Warehouse Management System

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Jesta Vision Suite

Jesta I.S. is a leading supplier of integrated software solutions for midsize and large retailers, wholesalers and manufacturers specializing in branded goods, apparel, footwear, hard goods and specialty industries. Jesta's c...Read more about Jesta Vision Suite

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SCP 4.0

Jada vendor management inventory and demand planning system is suitable for businesses looking to manage inventory holding costs and track service levels. SCP is offered as a best of breed application that is ideal for both midsiz...Read more about SCP 4.0

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S2K Warehouse Management

VAI’s is an independent software developer and the author of S2K Enterprise, an award winning cloud-based ERP solution utilized by customers operating across the distribution, manufacturing, specialty retail, and service sectors, ...Read more about S2K Warehouse Management

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Slingshot Enterprise Business Suite

The Slingshot Enterprise Business Suite is a web-based enterprise resource planning (ERP) software suite designed to serve mid-sized to large businesses. The system serves retail, distribution, manufacturing, financial services, p...Read more about Slingshot Enterprise Business Suite

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Fishbowl is the #1 manufacturing and warehouse inventory management software! Its powerful inventory control system gives your small or midsize business the exact tools needed to transform your inventory management and scale your ...Read more about Fishbowl

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Sphere WMS

SphereWMS warehouse management software optimizes workflow, direction, and processes at an operational level to increase efficiency and drive down costs for 3PL's, distribution, fulfillment, e-commerce, and retail operations. ...Read more about Sphere WMS

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SCExpert by Made4net is a cloud-based supply chain solution that helps organizations in the movement, tracking and management of inventory and documents. The solution consists of discrete processes that include ordering, transport...Read more about SCExpert

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3PL Warehouse Manager

3PL Warehouse Manager is a cloud-based warehouse management system designed for third-party logistics companies to manage multiple customers, processes and billing schedules. The system enables access to real-time information and ...Read more about 3PL Warehouse Manager

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The Nulogy Shop Floor Solution, as part of the Nulogy Multi-Enterprise Supply Chain Business Network Platform, digitizes the production floors of co-packers, contract manufacturers, value-adding 3PL operators, and raw and packagin...Read more about Nulogy

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Logimax is a warehouse management system built on the IBMi platform. It is built for 3PL and multi-customer warehouse businesses, but it is also suitable for industries such as consumer packaged goods, pharmaceuticals, cold stora...Read more about Logimax

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Da Vinci Supply Chain Business Suite

Da Vinci is Wolin Design Group’s cloud-based or on-premise supply chain management (SCM) solution designed specifically for small and midsize 3PLs, internet retailers and wholesale businesses with demanding warehouse, fulfillment ...Read more about Da Vinci Supply Chain Business Suite

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Cadence WMS

Cadre Technologies’ Cadence WMS is a warehouse management system that integrates warehouse operations with logistics and fulfillment. It is targeted at medium to large sized enterprises in the 3rd Party Logistics (3PL), 4th Party ...Read more about Cadence WMS

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Flowlytics software suite by Invistics is a cloud-based supply chain management solution designed for industries such as consumer packaged goods, industrial machinery, pharmaceuticals, metal fabrication and more. The modules in Fl...Read more about Flowlytics

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Nocturne by Healex is a cloud-based supply chain management solution designed for midsize and large enterprises. It primarily caters to industrial products, electronics, aerospace and medical equipment industries. Nocturne al...Read more about Nocturne

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Digital Supply Chain Network

One Network's Digital Supply Chain Network (previously known as Real Time Value Network) is a cloud-based supply chain management solution that helps larger organizations optimize their supply chain service. It offers a comprehens...Read more about Digital Supply Chain Network

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Iptor ERP

Iptor (formerly known as IBS Enterprise) offers cloud-based solutions for supply chain managers and distributors of all scale and size. It provides integrated ERP solution with built-in capabilities for supply chain management, in...Read more about Iptor ERP

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Demand Commander

Demand Commander is a cloud-based demand planning and forecasting solution that provides organizations of all sizes across various industries with a suite of applications to manage different aspects of their sales and operations p...Read more about Demand Commander

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ViewPoint Logistics

ViewPoint Logistics is an on-premise third-party logistics (3PL) solution that helps businesses to manage various activities of the supply chain process such as storage, handling and distribution of materials. ViewPoint Logis...Read more about ViewPoint Logistics

4.25 (2 reviews)

Buyers Guide

Last Updated: November 18, 2022

Vendor Managed Inventory (VMI) Software

The vendor-managed inventory approach refers to a business model where businesses act as the buyers while vendors (who manage manufacturing or the supply chain) are responsible for all stock at the buyer’s location. These vendors, who manufacture products sold at the buyer’s store, agree to replenish the inventory based on the fluctuating demand and supply trends. This sort of a relationship between the buyer and the vendor is a way to ensure that inventory is well-stocked and stores don’t face a shortfall.

In a way, VMI helps avoid overstocking or shortages in vendor warehouses and also helps avoid increased expenses for labor, purchasing and accounting for the buyers. Using VMI, businesses can optimally maintain inventory, which can result in easier access to products, faster processing times and lower labor costs for stocking and replenishing products. Vendors can also employ their own staff at the buyers’ stores to ensure that product promotion is more direct (i.e., from manufacturer to end customer) and streamlined across all locations.

In this model, the primary responsibility of ensuring optimum levels of inventory falls on the vendor. However, both vendors and buyers can choose to involve a third-party logistics (3PL) provider to deliver the products. The vendors and buyers have to be in constant communication to frequently gauge the inventory levels. One way to communicate and manage inventory is by using vendor-managed inventory software.

Here's what we'll cover:

What Is Vendor Managed Inventory Software?
Common Features of Vendor Managed Inventory Software
Evaluating Vendor Managed Inventory Software
Market Trends to Understand

What Is Vendor Managed Inventory Software?

Vendor managed inventory software, or supplier assisted inventory management (SAIM), allows the supplier to assume many of the duties related to maintaining the buyer’s inventory. Rather than place all of the responsibilities of the supply chain planning system on the customer, vendor managed inventory agreements establish a collaborative relationship between vendors and manufacturers or retailers. In this case, the buyer uses the software to keep the supplier aware of how much inventory should be available at the buyer’s location at all times, while the supplier uses the software to monitor that inventory and replenish it when necessary. This makes VMI software a particularly useful addition to any supply chain management system.

Common Features of Vendor Managed Inventory Software

Using VMI software, requests are constantly moving back and forth between buyer and supplier. The buyer can immediately inform the supplier about product activity, sending electronic documents that report inventory, sales and demand data, to name a few. The supplier can then reply with information and suggestions of its own, such as recommended replenishment quantities, advanced shipment notifications and invoices.

Specific features associated with VMI software include:

Supply chain synchronization The most basic feature of a vendor managed inventory system is to synchronize sales with the supply chain to automatically send new materials to buyers without their having to lift a finger.
Customer data acquisition VMI software simplifies and automates the process of getting product activity reports from each customer by automatically acquiring them and verifying the quality.
Product activity reports The software can create an inventory plan and order recommendations that can be adjusted or customized by the buyer and automatically send a purchase order once approved. This dramatically reduces the variability of manually managed inventory plans.
Activity analysis This business intelligence feature helps users identify problem areas, opportunities for growth and other potential VMI improvements.

Evaluating Vendor Managed Inventory Software

VMI software helps suppliers reduce lead times through increased visibility between supplier and buyer. It plays a crucial role in alerting the supplier when the customer is out of stock, so that if buyers historically put in last-minute, rush or disorganized orders, these systems can be particularly supportive in smoothing out that ordering and delivery process.

When purchasing vendor managed inventory software, consider the following criteria:

  • What format/software do your customers use for their product activity reports?
  • Is the VMI software customized/customizable to your industry’s product/inventory needs?
  • Are you looking for business intelligence capabilities that will improve the SAIM process over time?
  • Do you want a locally installed program, or a web-based software as a service system?

Market Trends to Understand

The basic trends of the market are edging toward a “less is more” ideology. This implies lower product wastages, lower costs and fewer instances of stock mismanagement. The usage of VMI solutions ensures that real-time data improves sales and fixes any issues that may arise.

Here are some market trends that can help buyers in their decision while purchasing a VMI software for their business and their vendors:

Shared risk: This is an important aspect of the VMI approach. Both vendors and buyers face risk as they are equally responsible for a smooth-functioning inventory management process. For example, sometimes when vendors fail to meet the sales targets, they repurchase the goods from buyers. In addition, the buyer is sometimes acting as only the host of the product and does not have ownership of the product. They earn commissions from the sale, but only after a sale is done. This does not give them much control over the stock in their stores.

Buyers, therefore, have to be certain about taking this risk and complying with contracts set with the vendors.

High market benchmark to cover:The VMI industry is dominated by retail giant Wal-Mart, which is now a master of it. Therefore, companies that opt for this business model and deploy VMI software solutions should look at Wal-Mart’s model of gaining profits in partnerships with its vendors. Constant innovations in the VMI software market will help companies further lower their inventory management costs. One way to go would be to automate warehouse management with robots, the way Amazon manages its warehouses and keeps a tight control over stock.

Stepping stone to innovation: The next step in VMI is jointly managed inventory (JMI), which aims for the buyer and vendor to have a highly collaborative relationship. JMI is essentially like VMI regarding goals and premise, but expands further on these categories. While developing JMI, buyers and vendors have to boost their tactical planning, which involves integrating the vendor into the buyer’s point-of-sale (POS) system. This way, vendors get a detailed and real-time insight into sales data; these analytics can help them make their manufacturing and delivery schedules more accurate.