Certified Materials and Resource Professional Practice

Vendor Managed Inventory (VMI) is a supply chain practice where the supplier takes on the responsibility for managing inventory levels at the buyer's location. This system allows suppliers to monitor the inventory usage in real time and make decisions about replenishment based on actual demand rather than forecasts provided by the buyer.

The advantage of VMI is that it typically leads to better stock availability and decreased stockouts since the supplier can react more swiftly to changes in inventory levels. Additionally, by involving the supplier in the inventory management process, the buyer can benefit from the supplier's expertise regarding lead times, optimal inventory levels, and product demand trends.

The other options don't capture the essence of VMI as accurately. While the responsibilities of inventory can vary, the core concept of VMI revolves around the supplier managing the inventory rather than the buyer alone or a collaborative effort involving multiple suppliers. Pricing strategy, while critical in supply chain management, is not a defining feature of VMI.