Vendor Managed Inventory (VMI) Practice: Some Insight Through Fresh Pilot Exploration From Indian Industries

Abstract

India is now-a-days considered as a fast developing country and earning the fruits of liberalization. Vendor-Managed Inventory (VMI) is a family of business models in which buyer of a product provides certain information to a vendor (Supply Chain) supplier of that product and the supplier takes full responsibility for maintaining an agreed inventory of the material, usually at the buyer’s consumption location. Here an effort has been to identify various research constructs like supplier selection for VMI parts, Information, stages where supply chain inventory held, were identified among several Indian Industries in order to verify the VMI concept as a fresh pilot exploration. Various benefits of VMI models were derived as well as several organizational objectives achieved through VMI like customer service improvement, improvement in profit margin, improvement in rate of return etc. Strategic drivers like competition, shorter product life cycle, corporate restructuring were viewed with obstacles like ineffective organizational structure, lack of suitable IT infrastructure. Result shows that 25% Industries adopted VMI at Full-fledged and 75 % adopted it partially. VMI model is on an average 63% beneficial to Reduction in transaction and 50 % each for Leveling in production process and inbound quality performance. It is concluded that lack of mutual understanding amongst partners and lack of decision making tools are the major obstacles for adoption.