International Journal of Physical Distribution & Logistics Management · 2003 · 200 citations · 27 references
ManagementIndustrial EngineeringOperations ManagementInventory ControlInventory ManagementProduction PlanningInventory Management SystemsInventory SystemsInventory TheoryVendor-managed InventoryDemand VisibilityInformation Sharing MechanismsInventory Information SharingProduction Cycle PlanningProduction Information SharingSales Data CaptureSimulation-based Inventory ReplenishmentVisibility
Information sharing practices such as vendor‑managed inventory give manufacturers access to more accurate demand data, yet most studies assume all downstream parties share information, which is rarely the case. This study uses discrete‑event simulation to examine how a manufacturer can combine traditional order data from non‑VMI customers with sales data from VMI customers in production and inventory control to assess operational efficiency. The simulation model is based on a real‑life VMI implementation and uses actual demand and product data. Partial improvement of demand visibility can enhance production and inventory control efficiency, but its value depends on product replenishment frequency and the manufacturer’s production planning cycle.
Information sharing practices such as vendor‐managed inventory (VMI) give manufacturers access to more accurate demand information, e.g. customer sales data, than before. The value of this type of information sharing has been established in many studies. However, most of the research has focused on the ideal situation of the manufacturer having access to information from all downstream parties. In practice, this is rarely the case. In this paper, discrete‐event simulation is used to examine how a manufacturer can combine traditional order data available from non‐VMI customers with sales data available from VMI customers in its production and inventory control and what impact this has on the manufacturer's operational efficiency. The simulation model is based on a real‐life VMI implementation and uses actual demand and product data. The key finding is that even for products with stable demand a partial improvement of demand visibility can improve production and inventory control efficiency, but that the value of visibility greatly depends on the target products’ replenishment frequencies and the production planning cycle employed by the manufacturer.
27