VMI Could Help Retailers
When the entertainment industry launched direct-to-store delivery of DVDs more than 10 years ago, the category’s overall success was rooted in the collaboration between the retailer providing point-of-sale information and the studio turning that data into actionable market intelligence and taking control of the process. For the first time in retail management history, the roles of the players in the supply chain had been rearranged.
The role of monitoring product on the shelves was passed from the retailers to the suppliers— wholesalers, manufacturers, distributors—who now had to manage their own product and decide when to replenish the retail shelves. The result was significant reduction in stock-outs and inventory, which led to a considerably shorter supply chain. The system, known as Vendor Managed Inventory or VMI, became part of the arsenal of the big box retailers like Wal-Mart and Home Depot and ushered in the dawn of a consumer-centric retail age.
Those successful practices can be applied to CE retailers today to help them improve their own supply chains and increase their competitive edge.