Abstract This thesis focuses on how applying the Vendor Managed Inventory (VMI) to the enterprise affects the operation cost from the manufacturing perspective. The inventory level of an industry has a crucial impact because it influences the profits, the capital transferring, the inventory space, the quality of products, the administrations, etc. Moreover, the inventory level and the procurement management are so highly related to the overall manufacturing cost that the profitability and competiveness of an industry can be influenced as well. Thus, the relationship between the enterprises and their suppliers has evolved from the traditional price-driven transaction mode to the cooperative relationship. Through the VMI, the suppliers are able to not only be shared with the inventory information from their customers, but have the right to manage customers¡¦ inventories; hence, the customer side can avoid the overcapacity or the shortage as a result of the surplus or insufficient inventories respectively. As a result, the inventory level can be reduced and the high quality service can be provided. The study of our research is based on the factors related to the profitability and efficiency in the enterprise achievement appraisal. I find that the inventory level directly influences the profitability-related factors, and the inventory is also involved with many aspects in the supply chain management, such as the supplier management, the relationship with the suppliers, the procurement strategies, etc. Furthermore, it is feasible to lower the inventory level through the process of the VMI according to the results of our questionnaires. We also held several comprehensive interviews with the industries which apply VMI for years. The useful opinions and suggestions collected from these industries are generalized to a proposal which can be used and referred for the individual enterprise. We hope the results of this thesis have the positive effects for the industry. Key words¡G Inventory control ¡APurchasing management¡AProfiable¡ACompetiable, VMI