VENDOR MANAGED INVENTORY

Vendor Managed Inventory

Vendor Managed Inventory

Introduction

Vendor Managed Inventory presents a bit of a challenge in cases where the buyer and the supplier are extensively separated from each other in terms of geography. Such distances can make it remarkably complicated for the buyer and the supplier to ensure that the inventory volume is sustained. Sustaining the inventory volume becomes much easier in cases where the buyer and the supplier are located within the same critical region. In such cases, the supplier is able to reduce costs by avoiding production of goods for the inventory. For instance, if a buyer is located in an off shore region, the supplier has to factor in a much large number of factors than that which would have to be considered if the supplier and the buyer were in the same region. Factors such as these would include shipping time, packaging, clearing and the like.

This report will attempt to present the characteristics of Vendor Managed Inventory. In order to do so, the report will concentrate on the retail industry in particular. The discussion will include a description of the supply chain practice including its key elements and its role in the overall supply chain. In addition, major benefits of the practice, risks/cost of practice and key issues in designing and implementing the practice will be highlighted. The discussion will incorporate an elaboration of the characteristics that make organizations suitable for the implementation of Vendor Managed Inventory (Michalski, 2009). Furthermore, the report will also present examples of companies in UAE that are successfully using the practice including best practices.

Discussion & Analyses

Challenges such as these make it questionable for a newly established organization to implement Vendor Managed Inventory. It is because of the same reason that most the case studies that are available regarding Vendor Managed Inventory are those that showcase multinationals that have the resources that are essential to meet the demands of Vendor Managed Inventory. However, these facts do not undermine the effectiveness of Vendor Managed Inventory as a supply chain management strategy. The research process that underlying the development of this paper showed that Vendor Managed Inventory is often considered and researched into extensively in the last few decades (Silver, 2008). Furthermore, a majority of research articles that have come forth to shed light on the intricacies of Vendor Managed Inventory have showed that Vendor Managed Inventory (if implemented through extensive change management) can help an organization facilitate the application of unconventional business models. As technology is influencing the field of project management, the role of teamwork and communication becomes important in the current business scenario. Inventory management is influenced by all these management factors.

The cost of inventory in an organization is not being fully identified, tracked, and therefore, effectively controlled, against the expected benefits which the inventory reduction can bring to the organization. Accuracy and completeness are important in inventory management to allow an organization to make informed investment decisions. Monitoring inventory is important for executives to determine if the investment is progressing as ...