Supplier-Owned Inventory

Supplier-owned inventory is a type of inventory management in which the supplier not only manages the inventory but also owns the stock close to or at the customer’s location until the point of consumption or usage by the customer. This system is often used in industries where there is a high demand for product turnovers, such as:

  • the food,
  • beverage industry.

Under supplier-owned inventory, the customer agrees to purchase a certain amount of product from the supplier over a period of time. The supplier then ships the product to the customer’s location and stores it there until it is needed. When the product is used, the customer pays for it based on an agreed-upon price.

There are several benefits to using supplier-owned inventory:

  1. For one thing, it allows companies to save on storage costs and other expenses related to inventory management.
  2. It also helps ensure that products are always readily available for customers.
  3. Additionally, supplier-owned inventory can help reduce the risk of stock shortages or other problems associated with traditional inventory systems.

Overall, supplier-owned inventory is a valuable tool for businesses that need to manage high levels of product turnover and minimize the amount of time and money spent on logistics. While there are some potential drawbacks to this system, it is generally considered an effective way to increase efficiency and improve customer satisfaction in many industries.

If you’re thinking about implementing supplier-owned inventory in your business, be sure to talk with a knowledgeable logistics expert who can help you evaluate your specific needs and determine if this system is right for you.

Related Links

The Differences Between a Consignment & VMI. Which Is The Most Valuable To You? — Skylink
Vendor-managed inventory
Vendor Managed Inventory (VMI): Three Steps in Making It Work – Supply Chain Resource Cooperative – NC State University
inventory ownership – Supply Chain World
Supply Chain News: Understanding Buyer-Vendor Inventory Options; Supply Chain News: Understanding Buyer-Vendor Inventory Options
Vendor Managed Inventory (VMI) or Consignment Inventory (CI)? – IndustryStar Solutions