Vendor Managed Inventory (VMI) can cause distributors serious concerns, which stem from the following anticipated predicaments from their particular point of view:
- When there is a lower level of stock, there is more expected risk of disruptions due to bad weather, union or service strikes, and so forth.
- Business can be adversely effected by the elimination of discounts, promotions, and/or forward buying
- Stock is forced on them, causing disruptions and threatening the existing standard of confidence
- Severe concern that the vendors may choose to forward integrate, and the distributors themselves get replaced or dropped entirely
- Vendors reap the loins share as the distributors sacrifice their power of knowing the data that the retailers want.
If you are in a VMI relationship with distributors, the above worries must be rectified and addressed before implementation or amendments to established practices are finalized. You must realize that distributors in a VMI model can be your saving grace, and every beneficial relationship yuou have with them must be both reliable and fair.