The fact that the vendor holds title to the merchandise is but one factor that changes the essence of the buyer/seller relationship. Title transfer has clear balance sheet ramifications, but in an international production model carries substantial operational implications as well. It should not be lost on the reader that even in the most contemporary of inventory management programs success depends on two operational activities that have been discussed throughout this book: lead time offsetting and inventory accuracy.While critical under the MRP model, the accuracy of both lead times and inventory levels in the case of VMI is even more important. To summarize, variances in lead times reverberate through the organization, eventually leading to disruption on the production floor. Conversely, inaccurate inventory counts will either precipitate or delay replenishment based on bogus information, again with far-reaching supply chain consequences. A combination of varying lead times and inaccurate inventories in an international VMI model is fatal to the operation.Lead time offsetting and inventory management are fundamental to any successful vendor/customer relationship, but in the VMI model responsibility for both ultimately lies with the supplier. As such, it is incumbent upon the vendor, with constant cooperation from the customer, to focus on reducing variances in both lead times and inventory counts.
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