b) Amazon uses VMI so it doesnt need to manually place purchase orders when stock runs low, as it has millions of SKUs to manage. This method of inventory management allows suppliers to take care of their own products within a retailer or e-tailers inventory.

Over half of the products listed on Amazon are sold by third party sellers. Third party vendors send their inventory to Amazons warehouses and the company takes care of the rest. From picking and packing, processing customer payments, to sending it off for shipping this fulfillment strategy has benefits for all parties. Amazon simply provides the channel for vendors to sell their products.

1. It is suggested that VMI has a benefit of creating closer business partnerships. What benefits does this generate?

(10 marks)