Exploring the benefits of vendor managed inventory

摘要

Purpose - The purpose of this paper is to explore the performance increase achieved by vendorrnmanaged inventory (VMI) under different levels of outside supply capacity, demand uncertainty, andrnlead time.rnDesign/methodology/approach - The study uses discrete event simulation to explore thernperformance increase achieved by VMI under different supply chain scenarios.rnFindings - The analysis suggests that when implementing a VMI program, the capacity restrictionsrnof suppliers have to be taken into consideration even though they have not participated in thernprogram. Furthermore, the results also show that unless the retailer provides additional information tornthe distributor to resolve the uncertainty, higher levels of uncertainty in market demand creaternsignificant reductions in the savings realized by VMI. Finally, this study proves that, regardless ofrnlead time horizons, VMI provides nearly the same level of performance increase as long as the ratiornof the retailer's lead time to that of the supplier's remains constant.rnPractical implications - This analysis provides a means for practitioners to understand the impactrnof various environmental and operational factors on the performance increase achieved by VMI sornthey can better analyze their specific business conditions to prepare their organizations for morernsuccessful VMI programs.rnOriginality/value - Although there is a range of research focusing on VMI, only a few of those haverntried to identify the factors that play an important role in the failure of VMI programs. Whilernextending the current literature, this is the first study to explore the impact of outside supply capacityrnon the performance improvements achieved by VMI.