Proctor & Gamble (but not Wal-Mart) manages the inventory at the distribution centers owned by Wal-Mart. This is an example of a concept called Vendor Managed Inventory (VMI). How does Wal-Mart's supply chain benefit from VMI? Discuss with reasoning.

Walmart benefits from VMI due to having the ability to carry most efficient maximum inventory due to P&G being able to keep up with inventory along with forecasting the needs in the future. From this Walmart does not have to worry about making sure the warehouses are stocked with the proper levels of goods, but can focus on new products to bring into the market along with the distribution of the products. A VMI allows access to inventory levels along with SKU and percentage of products in each warehouse (Simchi-Levi, Kaminsky, & Simchi-Levi, 2008). Walmart also has the ability to know exactly how many products are being distributed to where within the supply chain and they dont have to worry about running low on any products due to the VMI making sure they never do. The VMI does cost the company money but if you think that the inventory reduction costs could pay for this in the long run. The components demonstrate that by implementing a consignment program, Company B can reduce its annual inventory carrying costs from 36 percent to 18 percent ("Vendor Managed Inventory," 2014) Walmart has the ability to make better decisions along with reducing some of their costs by implementing this plan and allowing another company to do this. One could look at this as renting out your products for a company to use and train their people on, but really it is helping your company and you are saving money.

References: Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2008). Designing and Managing the Supply Chain. New York: McGraw- Hill.

Vendor Managed Inventory - Making Consignment and Vendor-Managed Inventory Work forYou. (2014). Retrieved from http://vendormanagedinventory.com/article7.htm