Disruptive factors of vendor-managed inventory in the manufacturing industry

Abstract

ABSTRACT Vendor-managed inventory began in the early 1980s when retailers demanded that vendors accept responsibility for replenishment based on the retailer’s sales data. Hence, this study identified and examined the critical factor of VMI’s success in the manufacturing industry. 252 valid responses were collected from the manufacturers using a non-probability purposive sampling approach, later analysed using Smart PLS-SEM. The study’s results indicated that information quality has a significant positive effect on VMI success. Similarly, information sharing also has a significant positive effect on VMI. Joint planning also has a significant positive effect on VMI success. Lastly, relationship quality and resource sharing also positively affect VMI’s success. The supplier should be represented in a cross-functional committee tasked with developing proposals and feedback for the system’s continual development. This helps VMI decision-makers avoid a strong buyer viewpoint. Further, the findings of this study give new information to policymakers and SC professionals to understand the optimisation of replenishment choices between the buyer and the supplier.