Find in Library

Vendor managed inventory (VMI) is a supply chain initiative where the supplier assumes the responsibility for managing inventories using advanced communication means such as online messaging and data retrieval system. A well collaborated vendor manage inventory system can improve supply chain performance by decreasing the inventory level and increasing the fill rate. This paper investigates the implementation of vendor managed inventory systems in a consumer goods industry. We consider (r, Q) policy for replenishing its inventory. The objective of work is to minimize the inventory across the supply chain and maximize the service level. The major contribution of this work is to develop a spreadsheet model for VMI system, Evaluation of Total inventory cost by using spreadsheet based method and Analytical method, Quantifying inventory reduction, Estimating service efficiency level, and validating the VMI spread sheet model with randomly generated demand. In the application, VMI as an inventory control system is able to reduce the inventory cost without sacrificing the service level. The results further more show that the inventory reduction obtained from analytical method is closer to the spread sheet based approach, which reveals the VMI success. However the VMI success is impacted by the quality of buyersupplier relationships, the quality of the IT system and the intensity of information sharing, but not by the quality of information shared.