Vendor-managed inventory: a review based on dimensions

Abstract

Vendor-managed inventory (VMI) represents the methodology through which the upstream stage of a supply chain (vendor) takes responsibility for managing the inventories at the downstream stage (customer) based on previously agreed limits. VMI is another method by which supply chains can be managed, and, owing to centralised decision-making and constant information sharing, the benefits are much higher than in traditional supply chain case. However, there exists a lack of research that identifies the dimensions of VMI, benefits of VMI, methods, and levels used in the VMI environment. The focus of this paper is to explore the existing literature on VMI, to categorise it according to the criteria evaluated, and to present a systematic review. In this study, we have classified the review into three categories such as dimension-based, methodology-based, and level-based. From the thorough literature review, we have identified six dimensions of VMI: namely, inventory, transportation, manufacturing, general benefits, coordination/collaboration, and information sharing. In addition, there are, three methodological classifications: modelling, simulation, and case studies. Finally, we will consider the level-based classification. Based on the review, several recommendations that improve the performance of VMI are presented.

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