Stockout Recovery under Consignment: The Role of Inventory Ownership in Supply Chains

Xu, Kefeng; Yin, Rui; Dong, Yan

doi:10.1111/deci.12198

Cited by 11 publications

(4 citation statements)

References 54 publications

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“…VMI was initiated as a promising collaborative approach to managing inventories of the buyer by its supplier (Waller et al , 1999; Yu et al , 2009; Yao et al , 2012; Xu et al , 2016). To date, extant literature includes several studies related to the factors that affect the successful implementation of VMI.…”

Section: Literature Reviewmentioning

confidence: 99%

Post-implementation analysis: dependence and trust in VMI context

Yalcin

Özpolat

Schniederjans

2018

IJPDLM

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Purpose-More than two decades long technological improvements in information sharing have not yet ensured a flawless execution of vendor managed inventory (VMI) and left interested parties wondering about the reasons of poor results. Although VMI is a collaborative tool, the relational factors in a VMI setting have not received enough attention due to challenges in obtaining relational buyer-supplier data in addition to extant focus on analytical approaches. In this paper, post-implementation relational factors are investigated in order to extract relevant insights. Design/methodology/approach-Accounting for the duration of the VMI relationship, we focus on two dimensions of VMI often ignored post-implementation: dependence of the buyer on the VMI-supplier and trust of the buyer in the VMI-supplier. Cross-sectional data were collected using a survey collected from distributors mostly in auto and electrical supply industries, which have their inventories managed by manufacturers through VMI arrangements. The sample was obtained from a leading third-party VMI-platform service provider that serves thousands of distributormanufacturer locations with billions of dollars in sales orders. Multiple Ordinary-Least-Squares (OLS) regression has been used to test the hypotheses. Findings-This paper provides empirical support that in the post-implementation stage, longer VMI relationships are associated with higher distributor dependence on the manufacturer. In addition, too much dependence could actually hurt the distributor's trust in the manufacturer. Practical implications-We propose that distributors maintain some of the purchasing and inventory management skills in house to limit their dependencies on the manufacturers. Manufacturers should also invest in trust-building activities, such as regular communications with distributors. Originality/value-This is the first study providing empirical evidence on the (i) positive association between length of VMI relationship and buyer dependence on the supplier, and (ii) curvilinear dependence-trust link in a postimplementation VMI context.

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Section: Literature Reviewmentioning

confidence: 99%

Post-implementation analysis: dependence and trust in VMI context

Yalcin

Özpolat

Schniederjans

2018

IJPDLM

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“…A steady stream of studies on the importance of demand management and on the provision of strong linkage between demand and supply has been reported in the literature (Chuang and Oliva, 2015;Kosior and Strong, 2006;Holmström et al, 2010). However, most retailers and distributors struggle to have the right stock-keeping unit (SKU) at the right place, in the right quantity, and at the right time to meet the demands of their customers (Christopher and Ryals, 2014) with others such as Xu et al (2016), examining how to recover from getting these decisions wrong such as having stockouts and in turn how to retain customers in these circumstances. In response to increasingly shortening product-life-cycles, higher customer expectation, intense price competition and fierce global competition between retail chains, i.e., discount stores, supermarkets or convenient stores; it is imperative to understand the optimum service level needed to satisfy consumers (Elsayed, 2015).…”

Section: Literature Reviewmentioning

confidence: 99%

Retail supply chain service levels: the role of inventory storage

Salam

Panahifar

Byrne

2016

JEIM

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Purpose In today’s competitive retail industry the most critical success factor is customer service which is indicated by product availability. It is argued that in the retail industry, product availability is an important measure of quality. The single most vital decision that every retailer needs to make is, how to maximize service level while keeping minimum inventory level. The purpose of this paper is to explain and demonstrate the relationship between inventory level and customer service level. Design/methodology/approach This study examines an inventory system utilizing a simulation model based on company data obtained from a retail fast-moving-consumer goods chain operating in Thailand. Findings The results suggest that the achievement of a responsive service level is dependent on managing an efficient supply chain in addition to logistics cost reductions. The findings also reveal the effect the inventory level has on the service level. From the findings of this study, demand variability and service level have been found to have the most significant influence on the inventory level. From the findings, it can also be shown that real and accurate information is very important for service supply chains. Practical implications The paper promotes the importance of having an appropriate inventory management policy for a retail chain which should be driven by retail companies in order to better balance inventory and service levels. Originality/value The relationship between the inventory level and customer service level lead to different outcomes at different combinations of inventory and service levels. Significant relationships were found between inventory and service levels.

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“…Supporting this view, reports from industry suggest significant positive benefits from implementing IC programs (Sullivan, 2008;and Valentini & Zavanella 2003). Recently, Xu et al (2016) found that IC programs can reduce the risk of stockouts, thus benefiting the focal firm. However, Rungtusanatham et al (2007) found that results obtained from utilizing IC in a retail setting are far from optimal due to increased information asymmetries and high monitoring costs for retailers.…”

Section: Introductionmentioning

confidence: 97%

How inventory consignment programs can improve supply chain performance: a process oriented perspective

Malhotra

Mackelprang

Jayaram

2017

Prod.

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Inventory Consignment (IC) has largely been viewed as a method of shifting the ownership and cost burden of inventory from buyer to supplier to benefit the buyer. This primarily accounting based viewpoint has largely ignored process changes that can occur for both the buyer and supplier. This study addresses this gap in the extant literature by examining IC from a process perspective by specifically addressing: (1) the implementation issues in an IC program for both buyers and suppliers and (2) the financial and operational benefits from IC for both buyers and suppliers. Using the case study methodology, we examined three firms that had varying degrees of involvement and roles in IC programs. Based on our detailed work with these three firms and their supply chain linkages, we offer a series of propositions to demonstrate that IC is not just an accounting issue, but also a management practice that requires a series of process changes in order to be successful. These process changes in turn provide operational benefits for both buyers and suppliers via the mechanism of increased demand visibility to suppliers. Through this approach, this study makes a contribution beyond what has been examined in the prior literature which has mostly dealt with IC as an accounting based inventory management issue.

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Stockout Recovery under Consignment: The Role of Inventory Ownership in Supply Chains

Cited by 11 publications

References 54 publications

Post-implementation analysis: dependence and trust in VMI context

Post-implementation analysis: dependence and trust in VMI context

Retail supply chain service levels: the role of inventory storage

How inventory consignment programs can improve supply chain performance: a process oriented perspective

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