Risk analysis and control of Vendor Managed Inventory model implementation for manufacturers

VMI (Vendor Managed Inventory) can reduce inventory management costs, improve efficiency of the whole supply chain, and then extend the profitable space, but in most cases the two parties of VMI adjacent structures will break a contract in the process of implementing VMI, which will inevitably leads to a relevant operating risk. Choosing the implementation of VMI model in AMP-TE (Tyco Electronics AMP Qingdao Limited Company) as an example, the successful risk control and strategic analysis method were proposed through establishing the perfect performance indicators system, forecasting the inventory accurately, coordinating between the two parties sufficiently and signing commodity price in the supply agreement of vendors.