Vendor-managed inventory

Definition

An arrangement where the distributor decides the replenishment of stock held at the customer's site.

Why It Matters

The common error is to read it as ownership, and it is not: the distributor decides when and how much to replenish, while title normally stays with the customer. Stock the distributor still owns is a CONSIGNMENT, a separate arrangement often layered on top, and the difference decides whether those bins are the buyer's working capital or somebody else's. Establish which it is account by account, how counts are reconciled, and what notice ends the arrangement, because that decides both the revenue's durability and the inventory's value.