Beyond Vendor Managed Inventory: the Glaxosmithkline Case

Abstract

In 1995, GlaxoSmithKline launched a project with the aim of changing the management of planning and replenishment processes within GSK’s global supply network. The purpose was to implement Vendor Managed Inventory (VMI) both upstream and downstream in the supply network in order to co-ordinate the flows of materials and information between a number of different suppliers and manufacturing and distribution plants. VMI is one of the most widely discussed partnering initiatives for improving the performance of supply networks. Most authors and practitioners consider it to be an approach for managing material and information flows between one or more customers and their suppliers, with a number of attendant benefits. Nevertheless, as it is traditionally viewed, VMI can also result in missing out on a number of important opportunities to optimise the entire supply network, as it only involves supplier-customer dyads. The present case study highlights how VMI can be used to manage the entire supply network as a single entity, and provides insights into how this form of VMI can be used to manage: (1) information flows, supporting the relationships between supply network members; (2) information systems, supporting data collection, management, diffusion and processing; (3) the performance monitoring system, highlighting the benefits for each supply network member as well as discouraging opportunistic behaviours.

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