Vendor-managed inventory

Vendor-managed inventory is inventory that is held in the factory, but ownership remains with the supplier. Technically, it is not on the factory Inventory from a value perspective, but it is physically located there. The point at which the Inventory is financially transferred from the supplier to the factory is defined by the ownership trigger. This can be when be when the inventory is consumed or when it is moved to a line-side location.

Typically, the supplier has visibility of the factories stock levels, and is responsible for delivering the relevant materials as required.