Description

Vendor Managed Inventory (VMI) often does not achieve the benefits claimed in theory. This paper empirically investigates both performance outcomes of VMI and its enablers. Survey data from buyers was analysed using PLS, a structural equation modelling method. The study reveals that VMI success is impacted by the quality of the buyer-supplier relationship, the quality of the IT-system and the intensity of information sharing, but not by the quality of the information shared. The results furthermore show that VMI leads to three performance outcomes: higher customer service levels, improved inventory planning and, to a lesser extent, cost reduction.