Inventory glossary

What is Vendor managed inventory?

Vendor managed inventory is a setup where the supplier decides when and how much stock to send you, instead of you placing purchase orders yourself.

In vendor managed inventory, the supplier watches your sales or stock levels and ships product on their own schedule. This can work for staple items where the supplier has good data and a strong relationship with you, but it means you give up direct control over order timing and quantity.

For most small Shopify stores this setup is rare because it needs tight data sharing with the supplier. If you run it for a few key SKUs, you still need to track what has been sent and what has sold, so you are not caught off guard by a shipment that does not match current demand.

Example

A candle store sells one supplier's wax melts under vendor managed inventory. The supplier checks the store's sales dashboard each month and ships 200 units when stock drops below 50. The store owner does not place an order, but still checks that 200 units arrived and matches that against what was shipped on the supplier's packing slip.

Common mistakes

  • Assuming the supplier always has accurate or current sales data.
  • Not checking incoming shipments against actual need, leading to overstock.
  • Losing track of agreed stock levels because no one is reviewing them regularly.

Vendor managed inventory and SteadyShelf

SteadyShelf is built for stores that place their own purchase orders based on forecasts and lead times, not for vendor managed inventory where the supplier decides shipments.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

Related terms

Supplier · Replenishment · Reorder point · Consignment inventory · Par level

Full inventory glossary

FAQ

Does vendor managed inventory mean I stop tracking stock myself?

No. You still need to check what arrives, confirm it matches your actual sales pace, and flag it if the supplier sends too much or too little.

Is vendor managed inventory common for small Shopify stores?

It is uncommon. It usually needs a close relationship with a supplier willing to manage your stock levels, which is more typical for larger accounts.

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