elow note should give you more details on VMI in Oracle apps Vendor Managed Inventory:1.

It is procurement and planning practice in which a company delegates key inventories management functions to one or more of its suppliers. 2. Under this arrangement supplier determines the items, quantities, and delivery schedules on behalf of the customer based on information it receives from the customers inventory and procurement systems. 3. Using VMI, manufacturers and distributors can anticipate customer needs and provide inventory more proactively than is possible using traditional procurement methods.Process:1) VMI Supplier can monitor current level of Inventory using Collaborative Planning module.2) Supplier can see details like,a. Forecasts b. PO / ASNc. On Hand Stock d. In Transit Quantitiese. Open Requisitions3) Supplier will request goods based on information he sees on portal.4) This request will get automatically converted to PR and if required we can set it for auto creating a Purchase Order.5) Customer will receive goods in normal process. Setup for VMI:1. Enable VMI at Approved supplier list2. Setup profiles for VMI enabling, a. PO: Automatic Document Sourcing:b. PO: Convert Requisition UOM to Source Document UOM3. Run VMI Replenishment Engine via collaborative planning4. Configuring isupplier portal to be linked to collaborative planning

We can use VMI and consigned inventory model together, difference in business process will be from accounting side for payments of goods.In VMI, payments will be as normal as procure to pay cycle.In Consigned inventory, payment will be when material is actually consumed from store.