Vendor Managed Inventory: Shorter Lead time, Great Cost Savings, Larger Health Impact.

Paper | January 31, 2020

Vendor-managed inventory requires vendors to hold a specified amount of readily available commodities for the sole use of the procurer. The USAID Global Health Supply Chain Program-Procurement and Supply Management (GHSC-PSM) project uses vendor-managed inventory for several health commodities.

The global demand for male condoms and voluntary medical male circumcision (VMMC) kits as preventative measures for contracting HIV/AIDS has been steadily increasing. As demand soars, lead times to manufacture and deliver commodities from a limited number of pre-qualified vendors have also been on the rise. With several social marketing campaigns of male condoms and VMMC outreach campaigns being implemented in the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) countries, it is increasingly critical to improve availability by reducing lead times and costs associated with these products. The USAID GHSC-PSM project uses vendor-managed inventory, which requires vendors to hold a specified amount of readily available commodities for procurement, for several health commodities, including male condoms and VMMC kits. The benefit of this approach is that inventory is available to address urgent needs and guaranteed to be shipped within 8-10 business days from vendor warehouses to any of GHSC-PSM and PEPFAR implementing countries.