Prerequisites to vendor-managed inventory

Abstract

Vendor-managed inventory (VMI) has become a widely used tool for supply chain performance improvement. However, not all VMI implementations are successful. Therefore, the aims of this research are to contribute to a better understanding of the critical issues surrounding VMI implementation, and to support corporate practice with a methodology for evaluating the VMI readiness of firms. Fifteen features that determine the suitability of VMI are identified. These can be broadly categorised as product-, company-, and supplier-related features. The framework developed in this research is validated through its application in 10 case study firms. The framework can be used by other firms to support the decision of whether or not to adopt VMI by providing valuable insight into how firms score on suitability for VMI adoptions along several dimensions. © 2012 Taylor & Francis.