Information Technology Enabled Vendor Managed Inventory in Modelling Supply Chain Issues: A Review

Introduction

Supply Chain (SC) is a network of firms interacting in a linear fashion to produce, sell and deliver a product or service to a predetermined market segment (Chopra and Meindl, 2001). Figure 1 shows the business model of SC process (Min and Zhou, 2002).

Figure 1.

This arrangement is found in a wide-range of industries like Dupont, Exxon, General Motors, in pharmaceuticals like Pfizer and in carriers like Federal Express, UPS. This arrangement is also found with retailers like Wal-Mart, Home Depot, and Sears. SC links all the chain partners within and across organization to work together by forming the partnerships to make the whole supply chain competitive (Maloni and Benton, 1997). Organizations recognized that they could not excel at the necessary competitive dimensions at a level needed to gain a competitive advantage without the cooperation and input of both their suppliers and their customers. The ability to integrate the differing functional areas of an organization with its suppliers and partners was seen as a logical step to improve competitiveness (Greis and Kasarda 1997; Morash et al., 1997; Thomas and Griffin, 1996; Houlihan, 1988, Beamon, 1998; Melachrinoudis et al., 2000). This requires integration of business processes, technical and organizational aspects. The concept of Supply Chain Management (SCM) emerged in the mid 1980s to meet this challenge of such integrations (Southard, 2001; Bowersox and Closs 1996). SCM is a recent evolution for such integration on the following grounds:

• • It speeds up the flow of information and materials through the whole process from the suppliers to the customers due to the advancements in information technology.

• • It is also proven that supply chain partnerships lead to more technical innovation and better quality products.

• • The concept that satisfies the essential customer attributes such as responsiveness, quality, flexibility, dependability and cost.

However, the successful implementation of SCM depends on many soft issues (strategic/behavioural) such as organizational resistance to change, inter-functional conflicts, joint production planning, profit sharing, team oriented performance measures, channel power shift, information sharing, real time communication, inventory and technical compatibility (Min and Zhou 2002). Many of the above issues in SCM are conceptually addressed and lot of scope exists for improving the performance of SC with good modeling. This chapter reviews the role of Information Technology Enabled Vendor Managed Inventory in modeling the supply chain soft issues, proposes the classification schema and points out the scope for future research.

The rest of the chapter is organised as follows: Section 2 addresses the supply chain environment with different mode of operation and objectives considered ; Section 3 delineates the operational issues ; Section 4 reports the different solution approaches proposed by the researchers for the various models and issues ; Section 5 proposes a classification schema ; Sections 6 summarises the major contributions of various researchers and highlights the state of the art reviews in modeling soft issues; Finally, the last section 7 provides the concluding remarks along with future research directions.

Environment

The Two-Echelon Supply chain, mode of operation and objectives considered by various researchers are reported in this section