Vendor-managed Inventory Implementation Research Articles

SWMR Algorithm Approach for the Vendor Managed Inventory Problem when Static Demand Rates

In a two-phase supply chain with Vendor Managed Inventory (VMI) policies, the supplier takes on the duty of keeping its retailers' inventory up to date and making sure they never run out of stock. This is in addition to his inbound inventory. This study aims to combine the retailers in various set partitions or to maximize their distribution and inventory holding costs within the same set partition. This paper focuses on a two-stage supply chain made of a single warehouse and multiple retailers (SWMR) facing a static demand and implementing VMI. We proposed a model for coordinating the system with a two-phase solution method. The first phase is to minimize the overall inventory costs and, in the second phase, a constructive vehicle routing problem (VRP) heuristic is used to optimize the distribution costs by satisfying some additional restrictions. Results of this implementation of VMI in an illustrative supply chain case are shown and discussed in detail.

Enhancing Supply Chain Efficiency: Implementation of Vendor Managed Inventory in Inventory Routing Problem

Enhancing Supply Chain Efficiency: Implementation of Vendor Managed Inventory in Inventory Routing Problem

Kerangka Kerja Evaluasi Kesesuaian Implementasi Vendor Managed Inventory

The aim of this research is Vendor Managed Inventory (VMI) collaborating in the supply chain. Suppliers are responsible for the availability of customer goods. VMI developed in the retail industry, the VMI concept has been used in the logistics industry. The successful application of the VMI concept has become an interesting research topic for academics and practitioners. This research develops a conceptual framework for evaluating the suitability of implementing VMI for a product in a specific company. Method through systematic literature review. The result of the research is a framework for the suitability of VMI implementation. The three dimensions of the product-related framework consist of 12 elements and 39 indicators that can be used for further research.

Vendor Managed Inventory (VMI) Implementation in Recycled PET Preform for The Beverage Industry

The beverage industry is a company that is focused on producing mineral water in Polyethylene Terephthalate (PET) bottles. PET bottles serve as the primary packaging choice in the beverage industry, making the use of preforms as a material for bottles unavoidable. On the other hand, the public is more aware of using sustainable materials. Adapting market awareness, the company shifted from virgin material to recycled material. Due to the significant initial investment, the company has decided on a single supplier strategy for recycled PET preform suppliers. This policy forces the company to manage the supplier to meet the company’s delivery accomplishment target. Currently, in the management of beverage found in the industry, the supplier only reaches 50% of delivery accomplishments, whereas the company target is 90%. The beverage industry strived for a revolution, so the company’s target was achieved. The vendor managed inventory method is implemented in this study to create a new revolution for PET preform suppliers, a new replenishment system. After the implementation of Vendor Managed Inventory (VMI), there has been an improvement, reaching 95% in delivery accomplishment. The adoption of vendor managed inventory ensures the attainment of the company’s objectives.

Implementation of vendor-managed inventory in hospitals: an empirical investigation

Implementation of vendor-managed inventory in hospitals: an empirical investigation

Managing Bullwhip Effect in Acoustic Guitar Manufacturing: A Case Study Through Vendor Managed Inventory (VMI) Approach

The Bullwhip Effect is a condition where differences arise between the supply and demand numbers within supply chain management. This acoustic guitar manufacturing faces challenges resulting from demand fluctuations, supply chain complexities, and inventory inefficiencies, which often lead to the Bullwhip Effect. The company experiences fluctuations in both demand and supply, consequently leading to inventory accumulation in its warehouses. This study aims to reduce the Bullwhip Effect score in acoustic guitar manufacturing by implementing the Vendor Managed Inventory (VMI) method. VMI acts as a regulatory mechanism during distribution, ensuring better control over dispatched products by incorporating forecasting techniques such as single exponential smoothing, double exponential smoothing, and linear regression. Before implementing VMI, the Bullwhip Effect scores were 1.42 for Retailer 1 and 1.69 for Retailer 2. After the successful implementation of VMI, significant reductions in the Bullwhip Effect scores were observed, with scores of 0.48 and 0.91 recorded for Retailer 1 and Retailer 2, respectively.

VMI adoption in automotive industries: two different perspectives

Vendor managed inventory (VMI) is a collaborative approach to manage inventory-related issues. In this method, the vendor has the privilege and accountability of stock replenishment decisions through consistent automatic inventory or sales data from the buyer. This study attempts to explore critical VMI factors among the buyers and the vendors in Indian automotive supply chains. An attempt is made to compare how professionals and academia perceive VMI implementation. Two separate questionnaires were formulated one for the corporates and another one for the academia. The Wilcoxon signed-rank test was employed for comparing corporates (buyer and vendor) and academic view towards VMI. Further, the t-test was used to investigate any significant difference for challenges and facilitators between the buyers and vendors. The outcomes from this study may help the automotive industry make a positive and efficient relationship between buyers and vendors and thus, enhance the supply chain efficacy.

A modified adaptive genetic algorithm for multi-product multi-period inventory routing problem

Recent developments in urbanization and e-commerce have pushed businesses to deploy efficient systems to decrease their supply chain cost. Vendor Managed Inventory (VMI) is one of the most widely used strategies to effectively manage supply chains with multiple parties. VMI implementation asks for solving the Inventory Routing Problem (IRP). This study considers a multi-product multi-period inventory routing problem, including a supplier, set of customers, and a fleet of heterogeneous vehicles. Due to the complex nature of the IRP, we developed a Modified Adaptive Genetic Algorithm (MAGA) to solve a variety of instances efficiently. As a benchmark, we considered the results obtained by Cplex software and an efficient heuristic from the literature. Through extensive computational experiments on a set of randomly generated instances, and using different metrics, we show that our approach distinctly outperforms the other two methods. In this way, we created a decision support and computer-based approach to assist policy and decision-makers in the pathway of constructing a sustainable society.

Understanding critical success factors of vendor-managed inventory in healthcare sector: A case study in Thailand

ABSTRACT The healthcare sector is currently facing the severe global competition, resulting to improve its business operations by decreasing overall cost and enhancing competitive advantage. Vendor-managed inventory (VMI) system is one of the effective solutions as its benefits directly support on inventory cost reduction. The VMI implementation is essential, and key critical success factors (CSFs) are diverse. Large efforts are made based on VMI approach from literature; however, a generalized analysis on interrelationship among CSFs of VMI implementation is limited. This paper desires to fill this gap by a new hybrid MCDM model, comprising of Fuzzy Delphi and Grey-DEMATEL methods. The results present the identification of 10 influencing CSFs and their cause–effect relationship. Additionally, this study provides an important insight into managerial implication to improve inventory performance of Thai healthcare sector.

Customers scheduling and clustering as vendor managed inventory enablers

The vendor managed inventory (VMI) implementation brings advantages to both vendors and customers, improving service levels and transportation efficiency. This paper aims to propose a two stages methodology to enable the VMI implementation without electronic data interchange. First, an algorithm is proposed to determine which customers to attend daily, respecting their needs and restrictions while seeking for economies of scale. Then an iterated local search metaheuristic, adapted to the capacitated p-median problem is proposed to divide the customers into the available trucks. The methodology was applied to a gas distribution case study. Results shown a 20.16% increase in the average quantity of gas delivered per customer, a drop over 90% in delivery delays and a reduction of 31.8% in clusters distances. These results demonstrate that the methodology improves the reliability of the distribution system, ensuring that the VMI implementation brings advantages to all parts involved.

When Does A Supply Chain Member Benefit from Vendor‐Managed Inventory?

Enabled by the advances in information technology (IT), many supply chain partners have adopted the practice of vendor‐managed inventory (VMI) to improve operations efficiency. While the IT investment for VMI implementation can be significant, the benefits of VMI to different supply chain members are not obvious based on anecdotal evidences and empirical studies. This paper studies the effects of VMI on a supply chain consisting of one manufacturer and one retailer to shed light on when an IT investment for VMI adoption can be justified. We show that whether the two supply chain members benefit from VMI depends on how the holding or shortage cost increment from the manufacturer to retailer compares with two corresponding critical values. We then develop comparative statics results on how these critical values change with respect to different parameters. Interestingly, the retailer is more likely to benefit from the adoption of VMI when its inventory holding cost is low, and the manufacturer is more likely to benefit from VMI adoption when its inventory holding cost is high, contradicting what our intuitions would suggest and what has been prescribed in the literature.

Inventory Control System by Using Vendor Managed Inventory (VMI)

The inventory control system has a strategic role for the business in managing inventory operations. Management of conventional inventory creates problems in the stock of goods that often runs into vacancies and excess goods at the retail level. This study aims to build inventory control system that can maintain the stability of goods availability at the retail level. The implementation of Vendor Managed Inventory (VMI) method on inventory control system provides transparency of sales data and inventory of goods at retailer level to supplier. Inventory control is performed by calculating safety stock and reorder point of goods based on sales data received by the system. Rule-based reasoning is provided on the system to facilitate the monitoring of inventory status information, thereby helping the process of inventory updates appropriately. Utilization of SMS technology is also considered as a medium of collecting sales data in real-time due to the ease of use. The results of this study indicate that inventory control using VMI ensures the availability of goods ± 70% and can reduce the accumulation of goods ± 30% at the retail level.

Evolutionary dynamics of two-actor VMI-driven supply chains

The strategy of integration known as vendor-managed inventory (VMI), which allows the coordination of inventory policies between producers and buyers in supply chains, has long been considered a strategy for inventory cost reduction. Although the literature acknowledges the importance of understanding the dynamics of VMI implementation through evolutionary games, research in this topic still remains scarce. This paper studies the dynamics of strategic interaction of a producer–buyer supply chain under a newly developed VMI scheme, which makes use of a synchronization mechanism between the buyer and the producer replenishment cycles. By using this alternative VMI representation, we obtain the mathematical conditions that determine the degree of stability of evolutionarily stable strategies. As other evolutionary game theoretical approaches, we also find a lower bound for penalty costs that ensures a VMI contract, but most importantly, we also find how a VMI implementation might depend on the difference between production and demand rates, regardless of any penalty costs.

Implementation of Vendor Managed Inventory (VMI) in Managing Inventory of Intra Ocular Lenses (IOL) in an Eye Care Organization

The Indian healthcare industry is a fast growing industry and needs attention for reengineering of many processes. The supply chain process is one of the important processes. But it lacks the attention of stakeholders due to which lack of efficiency of the process leads to direct or indirect impact on the businesses. Vendor managed inventory (VMI) is such a programe or tool that is still less used in the healthcare industry. VMI can help in increasing the efficiency of the supply chain process by delegating the responsibility of inventory management to the suppliers. The purpose of this paper was to measure the effectiveness of VMI over traditional inventory management system of IOLs (lenses that are used in surgeries of eye hospitals). A matrix was also designed to understand the key performance indicators of supply chain to assess the results of implementation of VMI in place of traditional managed inventory. True experimental design of quantitative research with pretest posttest was used to measure before and after impact of VMI on management of inventory of IOLs. A sample size of 14 types of lenses was taken to assess the impact of the VMI technique. Literature review of the traditional inventory management system and VMI was done and data was obtained from an eye care organization of inventory of IOLs to test the hypothesis to measure the effectiveness of VMI over traditional method of inventory management. The results concluded the success of VMI over traditional inventory management based on the performance indicators (OFR/TAT) of the supply chain.

Performance outcomes and success factors of industrial vending solutions

Purpose Industrial vending solutions are unique in that they represent a very specific form of vendor-managed inventory (VMI). The purpose of this paper is to investigate performance outcomes associated with industrial vending implementation, a topic that has been largely ignored by the academic community. Design/methodology/approach A survey instrument was developed from earlier work on VMI success. Structural equation modeling is used to identify relationships between three enablers (information exchange, information quality, and relationship quality), perceived vending system implementation success, and three outcomes (cost benefits, customer service benefits, and inventory benefits). Findings Statistical outcomes demonstrate support for the benefits arising from successful vending system implementation. This study demonstrates that industrial vending implementation success is strongly tied to the amount and quality of the information shared between the relationship partners. Practical implications Successful industrial vending implementation results in improved inventory control, increased levels of customer service, and tighter cost control. This study provides supply chain managers with current findings, which should aid them in evaluating their current and proposed vending solutions. Originality/value Although VMI has been studied in the past, little work has been conducted on industrial vending as a specific form of VMI. This is the first study to explore industrial vending from the viewpoint of VMI implementation and performance. Empirically tested study results that are grounded in transaction cost theory confirm a series of performance outcomes of industrial vending from a buyer’s perspective as well as a number of enablers for successful industrial vending implementation.

The Implementation of Vendor Managed Inventory In the Supply Chain with Simple Probabilistic Inventory Model

Numerous studies show that the implementation of Vendor Managed Inventory (VMI) benefits all members of the supply chain. This research develops model to prove the benefits obtained from implementing VMI to supplier-buyer partnership analytically. The model considers a two-level supply chain which consists of a single supplier and a single buyer. The analytical model is developed to supply chain inventory with probabilistic demand which follows normal distribution. The model also incorporates lead time as a decision variable and investigates the impacts of inventory management before and after the implementation of the VMI. The result shows that the analytical model has the ability to reduce the supply chain expected cost, improve the service level and increase the inventory replenishment. Numerical examples are given to prove them.

Key Success Factors of Vendor-Managed Inventory Implementation in Taiwan's Manufacturing Industry

Under increasing pressure from competitors and consumers, vendor-managed inventory (VMI), which is believed to be conducive to reducing inventory costs and improving distribution and sales, has been a popular system particularly in the retail industry. This present study, by adopting the modified Delphi method, attempts to identify key success factors of VMI implementation in Taiwan manufacturing industry and examine impact of the identified factors. Through three rounds of expert questionnaires, it is found that excellent project management, organizational fit, information sharing, trialability, and top management commitment are the five most important factors in terms of VMI implementation in Taiwan manufacturing industry. Employee training, a good project team, exercise of power, and relative advantages are of secondary importance to Taiwan manufacturing industry. Finally, it is hoped that these identified factors may serve as a guide for manufacturing companies in implementing VMI more effectively and efficiently.

Implementation of Vendor Managed Inventory (VMI) in Managing Intra Ocular Lenses (IOL) in Eye Care Organization

Nowadays healthcare has a completely changed scenario as compared with the early 90’s. As more and more profit generating hospitals are coming in the industry, hospital and healthcare is no longer remains a charitable or philanthropically act. So to be remain in the market and compete within hospitals need to now focus on the different and innovative strategies in every aspect. Supply chain and operations is one of the important key of any organization which directly impact on business and revenue. Vendor Managed inventory is not a new concept but it is not efficiently utilized in service and healthcare industry as of now. Some retail and automobile industries has utilized the concept and also able to reduce the inventory cost with manageable position of stock out and over stocking position. As hospital’s key functioning is to deal with life of patients on day to day so position of material need to be necessarily on right time and right place. This paper is based on the insight of the application of vendor managed inventory in the management of inventory for the IOL (Intra ocular lenses) that is used for the surgeries in the eye hospital. We will also study the questionnaire on the acceptability of the concept of vendor managed inventory in the hospital that will help to assess the acceptability of VMI in hospital and healthcare industry. Also a framework matrix is designed to understand the relation of VMI with the revenue earning and smoothening of operational efficiency.

Beyond Information Sharing: An Empirical Analysis of Vendor‐Managed Inventory

Using a unique, item‐level data set, we examined benefits to downstream firms (distributors) from the decision‐transfer component of vendor‐managed inventory (VMI), the feature that distinguishes VMI from other information‐sharing, collaborative supply chain programs. Our major findings are that the decision‐transfer component of VMI adds significant benefits to the downstream firm in terms of inventory and stockout reductions above and beyond information sharing, and that these two benefits may be realized at different times following VMI implementation; that is, inventory reduction, initially, may be the major benefit to distributors from VMI, while the benefits of stockout reduction may more likely be realized after the first year of implementation. In addition, VMI provides benefits to the upstream firm (manufacturer) by reducing the downstream firm's inventory variability, a likely contributor to the bullwhip effect. Based on our empirical analysis, the decision‐transfer component of VMI, on average, reduces inventory levels by 7%, stockouts by 31%, and inventory variability by 9%.

An Evolutionary Game Theory Approach to Modeling VMI Policies

The strategy of integration known as VMI (Vendor-Managed Inventory) allows the coordination of inventory policies between producers and buyers in supply chains. Based on a new proposed model for the implementation of VMI in a chain of two links composed of a producer and a buyer, this paper studies the evolution of individual strategies of the producer and the buyer by a formalism derived from the theory of evolutionary games. The conditions that determine the stability of evolutionarily stable strategies are derived and analyzed. Work results specify analytical conditions that favor the implementation of VMI on traditional chains without VMI.