1.
The most realized benefit of a Vendor Managed Inventory solution is the customer's cost savings. The need to carry large amounts of inventory in safety stock is reduced. Reviewing daily demand-data and inventory levels allows order point calculations to become more accurate and timely.

Daily demand-data alerts the supplier when inventory falls below order point calculation and restocking can happen quickly and seamlessly. This insures inventory is in stock when needed and not before.

2.
Vendor Managed Inventory reduces stock shortages which in turn can increase sales. Suppliers can better manage order point calculations because there is complete transparency. They calculate in factors such as packaging changes, shipping cost, lead times, new product roll out and pin point a need prior to stock-shortages or stockoutages.

Fewer stock-outages means fewer lost sales. Couple fewer outages with increased consumer loyalty, customers see a healthier bottom line. Statistically customers will see a sales increase of 5-25%.

3.
Vendor Managed Inventory Decreases Administrative Cost. Because the supplier takes on most of the responsibility of restocking and calculation order point purchasing departments spend less time issuing and reconciling purchase orders.

Because VMI is a demand-driven inventory solution there are fewer stock-outages or stock-shortages which means there is less time spent dealing with rush orders, and generally there are fewer orders overall. Too, due to accurate data there are fewer order mistakes and returned dead inventory.

For additional information see What is Vendor Managed Inventory.