Define the concept of vendor-managed inventory (VMI). How does VMI improve supply chain performance?

Vendor-Managed Inventory (VMI) is becoming a popular concept where the vendora consumer goods manufacturer, for examplemonitors and manages inventory for the customerfor example, a grocery store. VMI essentially outsources the inventory management function in supply chains to suppliers. VMI allows the vendor to view inventory needs from the customer's perspective and use this information to optimize its own production operations, better control inventory and capacity, and reduce total supply chain costs. VMI also allows vendors to make production decisions using downstream customer demand data. One disadvantage of VMI is that it does not account for substitutable products from competing manufacturers and often results in higher customer inventories than necessary.