VMI-type Supply Chains: a Brief Review

The primary purpose of this paper is to highlight for the research community and practitioners the various aspects of using VMI-type supply chains in today’s business environment as well as a number of directions for future studies. In this regard, fifty articles published in major international journals, beginning in 1995, which contribute to the VMI-type supply chains are reviewed via a systematic review methodology. Our findings show there is an incremental growth in employing of VMI strategies in logistic and supply chains. This paper characterizes the design aspects required to configure and establish a VMI-type supply chain in the industry including demand pattern, number of products, contract type between two parties, and profit sharing scheme. Moreover, the current gaps on the current state of VMI-type supply chain in literature are highlighted in last section of this paper that may motivate future studies

Vendor managed inventory performance in Malaysian manufacturing companies

The implementation of the Vendor Managed Inventory (VMI) in the Malaysian manufacturing sector can be viewed as a solution to mitigate the increment of operational costs and low performance in customer services. Many factors contributed to the performance of the VMI programme, but only a few attempts were made to determine the contribution of the VMI elements and the organizational factors on VMI performance; and the influence of the types of products in this relationship. The objectives of this study were to determine the relationship and to examine the impact of the VMI elements, the organizational factors on VMI performance, and the moderating effect of the types of products on the relationship between the VMI elements, the organizational factors and VMI performance. The study used the survey method. Data were tested from 101 manufacturing companies listed in the Federation of Malaysian Manufacturers. The findings from the Pearson Correlation test showed that inventory location, managerial commitment, decentralized decision- making, information- system capability and trust have significant and positive relationships with cost performance. Meanwhile, inventory location, demand visibility, inventorycontrol limits, managerial commitment, information- system capability, and trust have significant and positive relationships with service performance. In addition, the multiple regression analysis showed that demand visibility, inventory- control limits, inventory location, trust, and managerial commitment contribute to VMI performance. The hierarchical regression analyses revealed that the types of products have a significant moderating effect to warrant desirable performance from demand visibility, inventory location, inventory control limits, and inventory- ownership. Therefore, the implementation of VMI in the Malaysian manufacturing sector needs to share demand information, apply minimum and maximum limits for inventory control, locate storage locations near customer premises, establish trust, and provide sufficient managerial commitment to benefit from the VMI programme. This study also suggests that the application of inventory- control limits on innovative products would decrease the cost performance of VMI. Also, inventory- ownership by the supplier on functional products would decrease the service performance of VM

A Bi-objective Optimization for Vendor Managed Inventory Model

Vendor managed inventory is a continuous replenishment program that is designed to provide major cost saving benefits for both vendors and retailers. Previous research on this area mainly included single objective optimization models where the objective is to minimize the total supply chain costs or to maximize the total supply chain benefits. This paper presents a bi-objective mathematical model for single-manufacture multi-retailer with multi-product in order to maximize their benefits. It is assumed that demand is a decreasing and convex function of the retail price. In this paper, common replenishment cycle is considered for the manufacturer and its retailers. Then, the proposed model converts to the single-objective optimization problem using a weighted sum method. A genetic algorithm (GA) is applied to solve it and response surface methodology is employed to tune the GA parameters. Finally, several numerical examples are investigated to demonstrate the applicability of the proposed model and solution approach

Supply-Chain Management Issues In The Oil And Gas Industry

The oil and gas industry is involved in a global supply-chain that includes domestic and international transportation, ordering  and inventory visibility and control, materials handling, import/export facilitation and information technology. Thus, the industry offers a classic model for implementing supply-chain management techniques. In a supply-chain, a company is linked to its upstream suppliers and downstream distributors as materials, information, and capital flow through the supply-chain.  The purpose of this paper is to investigate the role of supply-chain management in the oil and gas industry. This paper also discusses the application of the Uniform Commercial Code (UCC) to supply-chain management issues. Then, several strategies are examined for improving supply-chains in the oil and gas industry. Finally, two case studies are introduced to show how improving supply-chain logistics in the oil and gas industry can improve efficiency and the bottom line

Modelo matemático de un sistema coordinado productor-comprador bajo el enfoque VMI

This work develops a new coordinated manufacturer-buyer model for a single item in a vendor-managed inventory (VMI) context. The proposed model includes the manufacturing uptime and a manufacturer-buyer synchronization scheme. This mechanism makes logistical coordination between manufacturer and buyer much easier. The analysis of the mathematical model of coordination considers production and demand rates, as well as totals of the manufacturer and the buyer’s ordering and holding inventory costs. This study is complemented by a sensitivity analysis. It focuses on the effects of parameter variations on proposed performance measurements in the manufacturer-buyer VMI coordinated scheme. Finally, analytical conditions under which the suggested coordinated implementation of VMI gives benefits to both manufacturer and buyer and to the supply chain are deduced and verified.En este trabajo se desarrolla un nuevo modelo matemático de un sistema coordinado productor-comprador mediante un acuerdo de inventarios administrados por el vendedor (VMI). El modelo propuesto considera el tiempo de fabricación del lote e incluye un esquema de sincronización entre el productor y el comprador que facilita la coordinación de la cadena de suministros. El análisis del modelo matemático de coordinación tiene en cuenta las tasas de producción y de demanda y los costos totales anuales de ordenar y mantener inventarios del productor y del comprador. El estudio es complementado por un análisis de sensibilidad que se enfoca sobre los efectos de las variaciones de los parámetros sobre algunas medidas de desempeño en el esquema coordinado VMI entre el productor y el comprador.  Finalmente, se deducen y verifican las condiciones analíticas bajo las cuales la implementación coordinada de VMI otorga beneficios al productor, al comprador y a la cadena de suministros. Los resultados muestran que es posible que el productor y el comprador obtengan beneficios en la implementación de VMI seleccionando una combinación apropiada de los parámetros usando el esquema de coordinación propuesto en una relación gana-gana

Study and Prospects: Adaptive Planning and Control of Supply Chain in One-of-a-kind Production

Based on the research project titled “Adaptive Planning and Control of Supply Chain in One-of-a-kind Production”, the research group performed a systematic review of supply chain integration, risk prediction and control and trace ability. Studies of a computer-aided and integrated production system for cost-effective OKP systemare included. Our efforts relevant to integration of supply chain in OKP, modeling &control of ripple effects in OKP supply chain and the trace ability of the OKP supply chain are introduced in this paper

Effects of a Trust Mechanism on Complex Adaptive Supply Networks: An Agent-Based Social Simulation Study

This paper models a supply network as a complex adaptive system (CAS), in which firms or agents interact with one another and adapt themselves. And it applies agent-based social simulation (ABSS), a research method of simulating social systems under the CAS paradigm, to observe emergent outcomes. The main purposes of this paper are to consider a social factor, trust, in modeling the agents\' behavioral decision-makings and, through the simulation studies, to examine the intermediate self-organizing processes and the resulting macro-level system behaviors. The simulations results reveal symmetrical trust levels between two trading agents, based on which the degree of trust relationship in each pair of trading agents as well as the resulting collaboration patterns in the entire supply network emerge. Also, it is shown that agents\' decision-making behavior based on the trust relationship can contribute to the reduction in the variability of inventory levels. This result can be explained by the fact that mutual trust relationship based on the past experiences of trading diminishes an agent\'s uncertainties about the trustworthiness of its trading partners and thereby tends to stabilize its inventory levels.Complex Adaptive System, Agent-Based Social Simulation, Supply Network, Trust

Sales & operations planning in complex business-to-business planning environments

Abstract. Sales & operations planning (S&OP) is a tactical planning process to balance company’s demand and supply. Increasing demand volatility has made S&OP very topical. Business-to-business (B2B) manufacturing with high product variation sets high requirements for S&OP processes and tools. Digitalization has created lots of hype around integrated business planning, which might have raised unjustified benefit expectations for S&OP deployment. In order to deploy S&OP process, it is important to recognize its core purpose and its plausible benefits, to avoid deployment failures caused by the lack of knowledge. This thesis aims to provide S&OP knowledge for complex business to business manufacturing. The qualitative research conducts literature review, and investigates tactical planning processes of three case companies, and current S&OP tool offering of five vendors through semi-structured interviews. From the aim of this thesis, three research questions were conducted: RQ1: What are the desired outcomes of S&OP? RQ2: What aspects of business are expected to be improved by S&OP process and tool deployment according to case companies? RQ3: How do the identified S&OP process models and tools compare with the case companies’ expectations? Following answers to research questions were found: RQ1:S&OP can be defined as a systematic tactical planning process to enhance collaborative target setting, vertical and horizontal integration, visibility creation, and performance management. By combining the different outcomes in different situations, the ultimate desired outcome seems to be the ability to consider all necessary factors in tactical planning. Answer to this research question is derived from the literature review, and it reflects to other research questions. RQ2: Visibility creation, demand forecasting, supply planning, financial planning, scenario planning, internal collaboration, external collaboration, product portfolio management and after sales services were high level requirements derived from the case companies’ specific expectations in the empirical study. RQ3: Identified S&OP process and tools support the major parts of case company expectations, although when having a closer look of some of the case companies’ specific external collaboration, and supply planning aspects, case companies have some unplausible expectations for S&OP tools. Managerial implications: In the early phases of S&OP deployment, companies should mainly focus on designing the process, rather than tool consideration. Only after the suitable process is established, companies should utilize advanced planning tools. The tactical planning tool vendors might emphasize high customizability or high optimization capabilities. These aspects might be trade-offs which companies should be aware. Platform flexibility allows non-standard process designs, and industry specific S&OP practices enables optimization to maximize results by S&OP specific tools. Scientific implications: This study investigates companies operating in B2B business that are utilizing make-to-order production strategy’s variants. Study provides insights of companies planning environments requirements and their desired outcomes of S&OP deployments. Study pointed out the conflicts between S&OP methods and quick response make-to-order strategies in high product variety environments, which indicates that besides evaluating S&OP’s design for planning environments at deployment, evaluation of S&OP methods’ suitability to company specific strategies should be highly considered.Sales & operations planning vaativissa yritykseltä-yritykselle-markkinan valmistusympäristöissä. Tiivistelmä. Sales & operations planning (S&OP) on taktisen suunnittelun prosessi yrityksen kysynnän ja tarjonnan tasapainottamiseksi. Kasvanut kysynnän vaihtelu on tehnyt S&OP:sta erittäin ajankohtaisen. Vaatimukset S&OP prosesseille ja työkaluille ovat korkeat, kun yritys valmistaa useita erilaisia tuotteita yritysmyyntiin. Digitalisaatio on kasvattanut kiinnostusta integroitua liiketoimintasuunnittelua kohtaan, minkä vuoksi S&OP:ta kohtaan on voinut syntyä katteettomia hyötyodotuksia. S&OP-prosessin käyttöönotossa on tärkeää tunnistaa sen päätarkoitus ja mahdolliset hyödyt, jottei implementointi epäonnistuisi tiedonpuutteen vuoksi. Tämän työn tarkoitus on tuoda tietoa S&OP:sta vaativissa yritykseltä-yritykselle-markkinan valmistusympäristöissä. Tässä kvalitatiivisessa tutkimuksessa koostetaan kirjallisuuskatsaus, tutkitaan kolmen case-yrityksen taktista suunnittelutoimintaa, sekä tutkitaan nykyistä S&OP-työkalutarjoamaa viiden järjestelmätoimittajan avulla. Case-yritykset ja järjestelmätoimittajat haastatellaan puolistrukturoiduilla haastatteluilla. Tutkimuksen tueksi on koostettu kolme tutkimuskysymystä: TK1: Mitä ovat S&OP-prosessin odotetut hyödyt? TK2: Mitä osa-alueita case-yritykset odottavat S&OP-prosessin ja työkalujen parantavan? TK3: Kuinka tunnistetut S&OP-mallit ja työkalut tukevat case-yritysten parannusodotuksia? Tutkimuskysymyksiin löydettiin seuraavat vastaukset: TK1: S&OP voidaan määritellä systemaattiseksi taktisen suunnittelun prosessiksi, joka vahvistaa yhteistä tavoitteiden asettamista, vertikaalista ja horisontaalista integraatiota, näkyvyyden luomista ja suorituskyvynjohtamista. Yhdistämällä erilaisia mahdollisia hyötyjä erilaisissa tilanteissa, suurin tavoiteltava hyöty olisi kyky ottaa huomioon kaikki tärkeimmät lopputulokseen vaikuttavat osatekijät taktisessa suunnittelussa. TK2: Näkyvyyden luominen, kysynnän ennustaminen, tuotannon- ja hankinnansuunnittelu, finanssisuunnittelu, skenaariosuunnittelu, sisäinen yhteistyö, ulkoinen yhteistyö, tuoteportfolion hallinta ja jälkimarkkinointi — palvelut ovat tunnistettuja ylätason osa-alueita, joita yritykset odottavat S&OP-prosessin ja työkalujen parantavan. TK3: S&OP prosessit ja työkalut tukevat pääosin yritysten odotuksia, mutta yrityksillä on eräitä spesifisiä ulkoisen yhteistyön ja toimitusketjun suunnittelutoiminnan odotuksia, joita ne eivät tue. Käytännön implikaatiot: S&OP-prosessien käyttöönottovaiheessa yritysten kannattaa ennemmin keskittyä prosessin suunnittelun, kuin työkalujen hankkimiseen. Vasta kun yrityksellä on vakiintunut S&OP-prosessi, yrityksen kannattaa pohtia kehittyneempien suunnittelujärjestelmien hankkimista. Suunnittelutyökalujen järjestelmäntoimittajat saattavat korostaa tuotteidensa räätälöityvyyttä tai optimointikyvykkyyttä. Välttämättä näiden molempien ominaisuuksien tuomia hyötyjä ei voida saavuttaa samassa järjestelmässä. Järjestelmän joustavuus sallii joustavamman rakenteen taktiseen suunnitteluprosessiin, kun taas optimointikyvykkäät järjestelmät nojautuvat toimialan suositeltuihin S&OP-prosessimalleihin. Tieteelliset implikaatiot: Tutkimus esittelee kompleksisissa ympäristöissä toimivien yritysten tarpeita S&OP-prosessille. Tutkimuksessa todettiin ristiriita nopean asiakasvasteen strategian, ja S&OP-metodien välillä, kun yrityksen tuotetarjoama on erittäin suuri, ja kaikki valmistettavat tuotteet ovat asiakasspesifisiä. Tämä viittaisi siihen, että toimivaan S&OP-prosessin rakenteeseen ei vaikuta voimakkaasti vain suunnitteluympäristö, vaan myös yrityksen strategia