Vendor Managed Inventory
THE EFFECTIVENESS OF VENDOR MANAGED INVENTORY (VMI)
TOWARDS IMPROVING SUPPLY CHAIN MANAGEMENT (SCM): A
CONTRACT MANUFACTURER PERSPECTIVE
By
SAZANI BIN SHAFIE
Research report in partial fulfillment of the requirement for
The degree of Master of Business Administration
MARCH 2004
I would like to take this opportunity to show my appreciation to certain people whose contributions and assistance have been critical towards the completion of this project. My heartfelt thanks and gratitude goes to Associates Professor T. Ramayah for his tireless effort and tremendous assistance. His comments have been invaluable and his guide remains inspiration by which I follow as I hike through the endless track of completion. My mother, my wife and my truly friend have been my strength during the toughest days in the progress of writing the paper.
Thank you all.
ii
TABLE OF CONTENTS
ACKNOWLEDGEMENTS
ii
TABLE OF CONTENTS
iii
LIST OF TABLES
vii
LIST OF FIGURES
viii
ABSTRAK
ix
ABSTRACT
x
Chapter 1
1
1.1
Background of the Study
1
1.2
Problem Statement
3
1.3
Research Objectives
4
1.4
Research Questions
5
1.5
Scope of the Study
5
1.6
Definition of Variables
6
1.6.1
Supply Chain Management
6
1.6.2
Vendor Managed Inventory
6
1.6.3
Chapter 2
INTRODUCTION
Contract Manufacturing
7
LITERATURE REVIEW
2.1
Introduction
9
2.1.1
The Evolution of SCM
9
2.1.2
Effective SCM and the need
iii
for Performance Measures
11
2.2
Performance Measures in SCM
12
2.3
Vendor Managed Inventory
14
2.3.1
Characteristic of VMI
14
2.3.2
VMI and Company Performance
16
2.3.3
Demand Sharing in VMI
18
2.3.4
Information Sharing in VMI
20
2.3.5
Strategic Partnership in VMI
21
2.4
22
2.5
Benefit of VMI
23
2.6
Problem with VMI
24
2.7
Chapter 3
TOWARDS IMPROVING SUPPLY CHAIN MANAGEMENT (SCM): A
CONTRACT MANUFACTURER PERSPECTIVE
By
SAZANI BIN SHAFIE
Research report in partial fulfillment of the requirement for
The degree of Master of Business Administration
MARCH 2004
I would like to take this opportunity to show my appreciation to certain people whose contributions and assistance have been critical towards the completion of this project. My heartfelt thanks and gratitude goes to Associates Professor T. Ramayah for his tireless effort and tremendous assistance. His comments have been invaluable and his guide remains inspiration by which I follow as I hike through the endless track of completion. My mother, my wife and my truly friend have been my strength during the toughest days in the progress of writing the paper.
Thank you all.
ii
TABLE OF CONTENTS
ACKNOWLEDGEMENTS
ii
TABLE OF CONTENTS
iii
LIST OF TABLES
vii
LIST OF FIGURES
viii
ABSTRAK
ix
ABSTRACT
x
Chapter 1
1
1.1
Background of the Study
1
1.2
Problem Statement
3
1.3
Research Objectives
4
1.4
Research Questions
5
1.5
Scope of the Study
5
1.6
Definition of Variables
6
1.6.1
Supply Chain Management
6
1.6.2
Vendor Managed Inventory
6
1.6.3
Chapter 2
INTRODUCTION
Contract Manufacturing
7
LITERATURE REVIEW
2.1
Introduction
9
2.1.1
The Evolution of SCM
9
2.1.2
Effective SCM and the need
iii
for Performance Measures
11
2.2
Performance Measures in SCM
12
2.3
Vendor Managed Inventory
14
2.3.1
Characteristic of VMI
14
2.3.2
VMI and Company Performance
16
2.3.3
Demand Sharing in VMI
18
2.3.4
Information Sharing in VMI
20
2.3.5
Strategic Partnership in VMI
21
2.4
22
2.5
Benefit of VMI
23
2.6
Problem with VMI
24
2.7
Chapter 3