Certified Supply Chain Professional (CSCP) Practice Exam

What is one of the key functions of a supplier in a VMI agreement?

1. Determining the customer’s retail strategy

2. Direct control over supplier payment methods

3. Handling receiving and stocking of goods

4. Restricting customer access to inventory

The correct answer is: Handling receiving and stocking of goods

In a Vendor Managed Inventory (VMI) agreement, one of the key functions of a supplier is handling the receiving and stocking of goods. This collaborative approach allows the supplier to take responsibility for managing inventory levels at the customer's location. By monitoring inventory data provided by the customer, the supplier can determine the optimal quantity and timing for replenishing stock. This ensures that the customer maintains adequate inventory levels without overstocking or stockouts, which can negatively impact both parties' operations. The supplier’s role in receiving and stocking goods enhances operational efficiency and strengthens the partnership between the supplier and the customer. In contrast, options related to determining the customer's retail strategy or control over payment methods do not accurately reflect the supplier's responsibilities in a VMI arrangement. Additionally, restricting customer access to inventory runs counter to the fundamental principle of collaboration inherent in VMI agreements, where open communication and trust are vital for success.