Capital Risk of Vendor in VMI System and Precautions-A Research Based on Innovation in Logistics Financial Service in China

The VMI system, as an effective replenishment mechanism, is capable of responding actively and correctly to the information of demand in the retail channel, thus improving the operating efficiency of the supply chain as a whole. However, changes in the mode of payment of the downstream retailer resulted from the application of the VMI system in the supply chain bring tremendous capital pressure on the upstream vendor, leading to the mounted operating risks of the VMI system. This paper starts by analyzing the capital risk facing the supplier in the VMI system, and then introduces the ideas of logistics finance to manage the risks on the part of the supplier, equalizing its profits with the risks it confronts. It's' finally pointed out in the paper that because of the participation of the third party logistics, the integration of innovation in logistics financial services and the VMI system can effectively organize and regulate the capital and credit activities in the VMI system, thus reaching the organic unity of information flow, logistics, and capital flow in the system.