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The impact of vendor managed inventory on transport operations

Author

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  • Disney, S. M.
  • Potter, A. T.
  • Gardner, B. M.

Abstract

This paper investigates the impact of a vendor managed inventory (VMI) strategy upon transportation operations in a supply chain. Specifically, the issue of batching to enable better use of transport vehicles is studied. A system dynamics methodology is used to develop difference equation models of three scenarios--traditional, internal consolidation and VMI. The holistic nature of inventory management within VMI enables batching to minimise transport demand without negatively impacting the overall dynamic performance of the supply chain. Using the concept of cost escapability, it is shown that transport cost savings are possible in both the short and long term.

Suggested Citation

  • Disney, S. M. & Potter, A. T. & Gardner, B. M., 2003. "The impact of vendor managed inventory on transport operations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 39(5), pages 363-380, September.
    • Handle: RePEc:eee:transe:v:39:y:2003:i:5:p:363-380
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    Citations

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    Cited by:

    1. A. V. Thomas & Biswajit Mahanty, 2021. "Dynamic assessment of control system designs of information shared supply chain network experiencing supplier disruption," Operational Research, Springer, vol. 21(1), pages 425-451, March.
    2. Roya Tat & Ata Allah Taleizadeh & Maryam Esmaeili, 2015. "Developing economic order quantity model for non-instantaneous deteriorating items in vendor-managed inventory (VMI) system," International Journal of Systems Science, Taylor & Francis Journals, vol. 46(7), pages 1257-1268, May.
    3. le Blanc, H.M. & Cruijssen, F. & Fleuren, H.A. & de Koster, M.B.M., 2006. "Factory gate pricing: An analysis of the Dutch retail distribution," European Journal of Operational Research, Elsevier, vol. 174(3), pages 1950-1967, November.
    4. Potter, Andrew & Disney, Stephen M., 2006. "Bullwhip and batching: An exploration," International Journal of Production Economics, Elsevier, vol. 104(2), pages 408-418, December.
    5. Mutlu, Fatih & Çetinkaya, Sıla, 2020. "Supplier–carrier–buyer channels: Contractual pricing for a carrier serving a supplier–buyer partnership," International Journal of Production Economics, Elsevier, vol. 230(C).
    6. Woxenius, Johan, 2012. "Directness as a key performance indicator for freight transport chains," Research in Transportation Economics, Elsevier, vol. 36(1), pages 63-72.
    7. Raden Achmad Chairdino Leuveano & Mohd Nizam Ab Rahman & Wan Mohd Faizal Wan Mahmood & Chairul Saleh, 2019. "Integrated Vendor–Buyer Lot-Sizing Model with Transportation and Quality Improvement Consideration under Just-in-Time Problem," Mathematics, MDPI, vol. 7(10), pages 1-25, October.
    8. Rohit Kumar Singh & Sachin Modgil & Padmanav Acharya, 2019. "Assessment of Supply Chain Flexibility Using System Dynamics Modeling," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 20(1), pages 39-63, December.
    9. de Jong, Gerard & Ben-Akiva, Moshe, 2007. "A micro-simulation model of shipment size and transport chain choice," Transportation Research Part B: Methodological, Elsevier, vol. 41(9), pages 950-965, November.
    10. Ayşegül Toptal & Sıla Çetinkaya, 2006. "Contractual agreements for coordination and vendor‐managed delivery under explicit transportation considerations," Naval Research Logistics (NRL), John Wiley & Sons, vol. 53(5), pages 397-417, August.
    11. Southard, Peter B. & Swenseth, Scott R., 2008. "Evaluating vendor-managed inventory (VMI) in non-traditional environments using simulation," International Journal of Production Economics, Elsevier, vol. 116(2), pages 275-287, December.
    12. Parsa, Payam & Rossetti, Manuel D. & Zhang, Shengfan & Pohl, Edward A., 2017. "Quantifying the benefits of continuous replenishment program for partner evaluation," International Journal of Production Economics, Elsevier, vol. 187(C), pages 229-245.
    13. Venkateswaran, Jayendran & Son, Young-Jun, 2007. "Effect of information update frequency on the stability of production-inventory control systems," International Journal of Production Economics, Elsevier, vol. 106(1), pages 171-190, March.
    14. Lin, J. & Naim, M.M. & Purvis, L. & Gosling, J., 2017. "The extension and exploitation of the inventory and order based production control system archetype from 1982 to 2015," International Journal of Production Economics, Elsevier, vol. 194(C), pages 135-152.
    15. Zhao, Qiu-Hong & Cheng, T.C.E., 2009. "An analytical study of the modification ability of distribution centers," European Journal of Operational Research, Elsevier, vol. 194(3), pages 901-910, May.
    16. Falasca, Mauro & Kros, John F., 2018. "Success factors and performance outcomes of healthcare industrial vending systems: An empirical analysis," Technological Forecasting and Social Change, Elsevier, vol. 126(C), pages 41-52.
    17. Govindan, Kannan, 2015. "The optimal replenishment policy for time-varying stochastic demand under vendor managed inventory," European Journal of Operational Research, Elsevier, vol. 242(2), pages 402-423.
    18. Van der Heide, G. & Buijs, P. & Roodbergen, K.J. & Vis, I.F.A., 2018. "Dynamic shipments of inventories in shared warehouse and transportation networks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 118(C), pages 240-257.
    19. Sadeghi, Javad & Mousavi, Seyed Mohsen & Niaki, Seyed Taghi Akhavan & Sadeghi, Saeid, 2014. "Optimizing a bi-objective inventory model of a three-echelon supply chain using a tuned hybrid bat algorithm," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 274-292.
    20. Yang, L. & Ng, C.T. & Cheng, T.C.E., 2010. "Evaluating the effects of distribution centres on the performance of vendor-managed inventory systems," European Journal of Operational Research, Elsevier, vol. 201(1), pages 112-122, February.
    21. Mateen, Arqum & Chatterjee, Ashis K, 2015. "Vendor Managed Inventory System with Emission Related Costs," Working papers 185, Indian Institute of Management Kozhikode.
    22. Xu, Kefeng & Leung, Mark T., 2009. "Stocking policy in a two-party vendor managed channel with space restrictions," International Journal of Production Economics, Elsevier, vol. 117(2), pages 271-285, February.

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