Vendor-managed inventory in a global maritime supply chain – The case of a Brazilian pulp producer

Abstract

Global trade lanes rely on shipping companies and operators to transport their goods. This may be changing as producers increase their control in downstream logistics. We examine how the flow of pulp from Brasilia to main markets in Europe has evolved, and how the roles of producers, ship operators and distributors in the value chain have changed and will continue to develop. By using an in-depth case study, we show some disruptive changes in the structure and operations of the concerned supply chain. The case company signed a long-term contract with a shipbuilder and operator company to transport its total export volume of wood pulp. Thus, the pulp producer’s dedicated fleet enables a move from fluctuating, unreliable pulp shipments towards pre-scheduled, accurate deliveries to destinations within close proximity of the pulp customers’ sites. Moreover, the pulp producer under study has also agreed with its key overseas customers that vendor-managed inventories (VMIs) will be implemented on a global scale to reduce inventories across the supply chain and improve customer service. In the current body of knowledge, VMI is mainly applicable in local contexts. There are only few cases documenting VMI implementation on a global scale, not to mention in the global maritime context. The case reported could serve as a precedence of novel solutions for supply chains more generally.