Performance outcomes and success factors of vendor managed inventory (VMI)

M.J.T. Claassen, A.J. Weele, van, E.M. Raaij, van

Research output: Contribution to journalArticleAcademicpeer-review

96 Citations (Scopus)
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Abstract

Purpose – The purpose of this paper is to seek to investigate performance outcomes of vendor managed inventory (VMI) from a buyer's perspective and enablers for its successful application. Design/methodology/approach – Structural equation modelling through Partial Least Squares (PLS) is used to identify relationships between four enablers (information systems, information sharing, information quality, and relationship quality), perceived VMI success, and three outcomes (cost reductions, customer service, and supply chain control). Findings – Buyer-perceived VMI success is impacted by the quality of the buyer-supplier relationship, the quality of the IT-system and the intensity of information sharing, but not by the actual quality of the information shared. Furthermore, VMI leads to three performance outcomes: higher customer service levels, improved supply chain control and, to a lesser extent, cost reduction. Research limitations/implications – Although theory stipulates a positive impact of high quality information on the success of VMI, this study shows that the effect of information quality is limited in practice. Practical implications – The results of the survey show that purchasing managers who invest in the relationship with their suppliers and a good IT infrastructure are more likely to get better results from a VMI implementation. Furthermore, this paper shows that while most managers expect major cost reductions when implementing VMI, benefits primarily come from improved service levels. Originality/value – The study provides empirical evidence of why VMI in practice does not achieve all the benefits claimed in theory.
Original languageEnglish
Pages (from-to)406-414
Number of pages9
JournalSupply Chain Management : an International Journal
Volume13
Issue number6
DOIs
Publication statusPublished - 2008

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Success factors
Vendor managed inventory
Service levels
Enablers
Information sharing
Managers
Supply chain control
Customer service
Buyers
IT infrastructure
Quality information
Structural equation modeling
Quality of information
Information systems
Information quality
Relationship quality
Partial least squares
Suppliers
Purchasing
Empirical evidence

Cite this

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abstract = "Purpose – The purpose of this paper is to seek to investigate performance outcomes of vendor managed inventory (VMI) from a buyer's perspective and enablers for its successful application. Design/methodology/approach – Structural equation modelling through Partial Least Squares (PLS) is used to identify relationships between four enablers (information systems, information sharing, information quality, and relationship quality), perceived VMI success, and three outcomes (cost reductions, customer service, and supply chain control). Findings – Buyer-perceived VMI success is impacted by the quality of the buyer-supplier relationship, the quality of the IT-system and the intensity of information sharing, but not by the actual quality of the information shared. Furthermore, VMI leads to three performance outcomes: higher customer service levels, improved supply chain control and, to a lesser extent, cost reduction. Research limitations/implications – Although theory stipulates a positive impact of high quality information on the success of VMI, this study shows that the effect of information quality is limited in practice. Practical implications – The results of the survey show that purchasing managers who invest in the relationship with their suppliers and a good IT infrastructure are more likely to get better results from a VMI implementation. Furthermore, this paper shows that while most managers expect major cost reductions when implementing VMI, benefits primarily come from improved service levels. Originality/value – The study provides empirical evidence of why VMI in practice does not achieve all the benefits claimed in theory.",
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Performance outcomes and success factors of vendor managed inventory (VMI). / Claassen, M.J.T.; Weele, van, A.J.; Raaij, van, E.M.

In: Supply Chain Management : an International Journal, Vol. 13, No. 6, 2008, p. 406-414.

Research output: Contribution to journalArticleAcademicpeer-review

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