This paper evaluates how a firm uses vendor managed inventory (VMI) to manage inventories under costs constraint in uncertainly industrial environment and various demand. The emphasis of this research is to discuss the impacts how demand variation influences the effects of the firm executing VMI and how different supplier levels (ABC) affects firm¡¦s VMI strategy. This research built a cost model which contained construction cost, overhead cost, inventory cost, and shortage cost and compared the profits ex-using VMI with the profits using VMI. Furthermore, use the same model to find out the most proper VMI decisions in different supplier levels¡¦ conditions. This paper obtained some conclusions. First, the firm using VMI under uncertain demand would take more advantages than under certain demand. Second, we can find the best VMI strategy of a firm.

Vendor managed inventory (VMI) is a form of automated replenishment under which a supplier takes responsibility for managing a customer¡¦s inventory levels for a given product or material. The promise of VMI was more efficient inventory management with less out-of-stock, improved sales and improved consumer satisfaction. Based on the sharing sales information, VMI makes suppliers reduce inventory and cost. Therefore, VMI is one of the most widely discussed initiatives for improving multi-firm supply chain efficiency. The purpose of this paper is to discuss the effect of supplier¡¦s expected cost by using the sharing sales information .We assume the underlying demand process faced by the retailer is ARMA(1,2). We model the supplier¡¦s delivery variance, optimal delivery-up-to level, and expected cost under three different levels of information sharing, namely no information sharing, partial information sharing, and total information sharing. Furthermore, we study the sensitivity analysis of supplier¡¦s delivery variance, optimal delivery-up-to level, and expected cost for the following four factors: lead-time l, correlation coefficient , tow-weights in ARMA(1,2), and , followed by numerical examples to verify our findings. The main results are as follows. 1¡B Information sharing stabilizes the supplier¡¦s delivery and reduces supplier¡¦s optimal delivery-up-to level as well as expected cost. 2¡B In each level of information sharing, there is positive effect to the supplier¡¦s delivery variance, optimal delivery-up-to level, and expected cost for every factor. 3¡B All the factors multiply the cost reduction effect contributed by increasing the level of information sharing. Among all, the lead time l and cause the most significant effect.

<p>Today’s business market is highly competitive, therefore companies need to be constantly updated and change the way they operate their business, in order to survive and remain competitive. The situation on today’s market requires that companies have the ability to quickly respond to market changes and new customer demands within short product lifecycles. In order to deal with this new market situation, companies need to improve the integration with other companies within their business. This integration facilitates the companies’ ability to quickly adapt to new market situations and survive on a fast changing market. One of the main underlying concepts of this collaborative commerce is Supply Chain Management (SCM) which integrates and coordinates a company’s processes both internally and externally. Information Technology (IT) could improve the effectiveness of SCM. IT-solutions make the business processes more effective and improves the integration with other actors within the supply chain. The purpose with this thesis is to describe and explain the effects for businesses and the consequences for its processes when implementing a real-time IT-Logistics solution together with identifying the critical success factors. The thesis has been conducted by studying theory regarding supply chain management, business renewal and implementation effects. Further, a case study has been conducted where three actors have been interviewed; a manufacturer (Volvo Powertrain), a subcontractor (Metallfabriken Ljunghäll AB) and a system developer (PipeChain). The analysis of the theoretical framework and the empirical research has contributed with an identification of major effects and consequences when implementing a real-time IT-Logistics solution. Some of the effects are: inventory reduction, higher delivery accuracy, improved relations and increased flexibility. Examples of consequences these effects have caused are: more accurate planning and production, effective production processes as well as an improved delivery process. Additionally, success factors for an implementation have been identified such as mutual trust, understanding of change and evaluation.</p> / <p>Konkurrensen är stor inom dagens affärsmarknad vilket medför att företag ständigt måste vara uppdaterade och förändra deras affärsverksamhet för att kunna överleva och vara konkurrenskraftiga på marknaden. Dagens marknadssituation erfodrar att företag snabbt kan reagera på marknadsförändringar och nya kundkrav vid allt kortare produktlivscyklar. För att företag skall kunna hantera denna nya marknadssituation måste företagen bli integrerade med varandra inom deras affärsområde. Denna integrering underlättar företagens förmåga att snabbt kunna anpassa sig till nya marknadssituationer och överleva på en snabbt föränderlig marknad. Ett utav de största grundläggande koncepten för denna integrering är flödeshantering (Supply Chain Management). Flödeshanteringen integrerar och koordinerar företagets processer både internt som externt. Informationsteknologi (IT) kan förbättra effektiviteten av flödeshanteringen. IT-lösningar skapar effektivare affärsprocesser och förbättrar integrationen med andra aktörer inom företagets försörjningskedja. Syftet med uppsatsen är att beskriva och förklara effekter för affärsverksamheten samt konsekvenser för dess affärsprocesser, vid en implementering av en realtidslogistiklösning. Uppsatsen syftar vidare till att identifiera framgångsfaktorer vid en sådan implementering. Uppsatsarbetet har genomförts genom en litteraturstudie där teori om flödeshantering, affärsförändring och implementationseffekter har behandlats. En fallstudie i uppsatsen har använts där tre aktörer har blivit intervjuade; en tillverkare (Volvo Powertrain), en underleverantör (Metallfabriken Ljunghäll) och en systemutvecklare (PipeChain). Analysen av litteraturstudien och den empiriska undersökningen har bidragit till en identifiering av huvudeffekter samt konsekvenser vid en implementering av en IT-logistiklösning. Några av dessa effekter är: lagerreducering, högre leveranssäkerhet, förbättrade relationer samt ökad flexibilitet. Exempel på konsekvenser dessa effekter har orsakat är: precisare planering och produktion, effektivare produktionsprocesser samt förbättrad leveransprocess. Vidare så har framgångsfaktorer för lyckad implementering identifierats så som ömsesidig tillit, förståelse för förändring samt utvärdering.</p>

Today’s business market is highly competitive, therefore companies need to be constantly updated and change the way they operate their business, in order to survive and remain competitive. The situation on today’s market requires that companies have the ability to quickly respond to market changes and new customer demands within short product lifecycles. In order to deal with this new market situation, companies need to improve the integration with other companies within their business. This integration facilitates the companies’ ability to quickly adapt to new market situations and survive on a fast changing market. One of the main underlying concepts of this collaborative commerce is Supply Chain Management (SCM) which integrates and coordinates a company’s processes both internally and externally. Information Technology (IT) could improve the effectiveness of SCM. IT-solutions make the business processes more effective and improves the integration with other actors within the supply chain. The purpose with this thesis is to describe and explain the effects for businesses and the consequences for its processes when implementing a real-time IT-Logistics solution together with identifying the critical success factors. The thesis has been conducted by studying theory regarding supply chain management, business renewal and implementation effects. Further, a case study has been conducted where three actors have been interviewed; a manufacturer (Volvo Powertrain), a subcontractor (Metallfabriken Ljunghäll AB) and a system developer (PipeChain). The analysis of the theoretical framework and the empirical research has contributed with an identification of major effects and consequences when implementing a real-time IT-Logistics solution. Some of the effects are: inventory reduction, higher delivery accuracy, improved relations and increased flexibility. Examples of consequences these effects have caused are: more accurate planning and production, effective production processes as well as an improved delivery process. Additionally, success factors for an implementation have been identified such as mutual trust, understanding of change and evaluation. / Konkurrensen är stor inom dagens affärsmarknad vilket medför att företag ständigt måste vara uppdaterade och förändra deras affärsverksamhet för att kunna överleva och vara konkurrenskraftiga på marknaden. Dagens marknadssituation erfodrar att företag snabbt kan reagera på marknadsförändringar och nya kundkrav vid allt kortare produktlivscyklar. För att företag skall kunna hantera denna nya marknadssituation måste företagen bli integrerade med varandra inom deras affärsområde. Denna integrering underlättar företagens förmåga att snabbt kunna anpassa sig till nya marknadssituationer och överleva på en snabbt föränderlig marknad. Ett utav de största grundläggande koncepten för denna integrering är flödeshantering (Supply Chain Management). Flödeshanteringen integrerar och koordinerar företagets processer både internt som externt. Informationsteknologi (IT) kan förbättra effektiviteten av flödeshanteringen. IT-lösningar skapar effektivare affärsprocesser och förbättrar integrationen med andra aktörer inom företagets försörjningskedja. Syftet med uppsatsen är att beskriva och förklara effekter för affärsverksamheten samt konsekvenser för dess affärsprocesser, vid en implementering av en realtidslogistiklösning. Uppsatsen syftar vidare till att identifiera framgångsfaktorer vid en sådan implementering. Uppsatsarbetet har genomförts genom en litteraturstudie där teori om flödeshantering, affärsförändring och implementationseffekter har behandlats. En fallstudie i uppsatsen har använts där tre aktörer har blivit intervjuade; en tillverkare (Volvo Powertrain), en underleverantör (Metallfabriken Ljunghäll) och en systemutvecklare (PipeChain). Analysen av litteraturstudien och den empiriska undersökningen har bidragit till en identifiering av huvudeffekter samt konsekvenser vid en implementering av en IT-logistiklösning. Några av dessa effekter är: lagerreducering, högre leveranssäkerhet, förbättrade relationer samt ökad flexibilitet. Exempel på konsekvenser dessa effekter har orsakat är: precisare planering och produktion, effektivare produktionsprocesser samt förbättrad leveransprocess. Vidare så har framgångsfaktorer för lyckad implementering identifierats så som ömsesidig tillit, förståelse för förändring samt utvärdering.

For many retailers, manufacturers, and wholesalers, inventory is their single largest investments of corporate assets. Problems such as stock-outs and bullwhip effect due to sales fluctuation and poor visibility are normal for manufactures. Unnecessary activities, in the purchasing process internally and externally, such as double order handling, cost both money and time. It is widely known that firms no longer can compete effectively in isolation of their suppliers and other entities. The future success of many businesses depends on co-operation and the co-ordination of efforts; making Supply Chain Management important. JIT and VMI are two of the philosophies that have been used to update supply chain relationships and management. By recognising your own supply weaknesses, the need for a supply strategy and a purchasing portfolio which classify suppliers emerges. There is an interest in examining what possible benefits and drawbacks, JIT and VMI collaboration can bring and how they differ from each other. In order to have a successful collaboration and implementation, it is important to know what basis to choose suppliers on and understand what needs to be in place, internally and externally, before starting either a JIT or VMI relationship with different suppliers. An inductive method was used in order to transform the literature review into a case study research. Explanatory and exploratory strategy was combined as well as qualitative and quantitative data collection such as oral interviews and written questionnaires. The case study was carried out at an accessory purchasing department at a large production company referred to as the “Focal company” in this thesis. Also, participating in the study were selected suppliers of the Focal company. The literature review and the case study data was analysed which led to the results that: • JIT and VMI can shorten lead time, improve quality and relationships if used properly, otherwise it can lead to increased inventory levels. • Key factors for enabeling JIT and VMI are common goals, management commitment, accurate information and suitable software systems. • Suitable suppliers for JIT and VMI are companies that have equal dependency and/or have interdependency and are willing and able to contribute to the competitive advantage of the buying firm. • Supplier selection criteria are price, quality, delivery, flexibility, reliability organizational culture, structure and strategy. • Implementation of JIT is not an option today at the Focal company. • With a few IT-system updates, a little bit of education and training the Focal company and most of the suppliers in this study are ready for VMI. • Because of the good balance of power and dependence in the relationships between the Focal company and their suppliers there is a good chance of a successful outcome. • The Focal company’s rating criteria are well correlating with the literatures findings, which further support that they are ready to select suppliers for integrated relationships.

<p>For many retailers, manufacturers, and wholesalers, inventory is their single largest investments of corporate assets. Problems such as stock-outs and bullwhip effect due to sales fluctuation and poor visibility are normal for manufactures. Unnecessary activities, in the purchasing process internally and externally, such as double order handling, cost both money and time.</p><p>It is widely known that firms no longer can compete effectively in isolation of their suppliers and other entities. The future success of many businesses depends on co-operation and the co-ordination of efforts; making Supply Chain Management important. JIT and VMI are two of the philosophies that have been used to update supply chain relationships and management. By recognising your own supply weaknesses, the need for a supply strategy and a purchasing portfolio which classify suppliers emerges.</p><p>There is an interest in examining what possible benefits and drawbacks, JIT and VMI collaboration can bring and how they differ from each other. In order to have a successful collaboration and implementation, it is important to know what basis to choose suppliers on and understand what needs to be in place, internally and externally, before starting either a JIT or VMI relationship with different suppliers.</p><p>An inductive method was used in order to transform the literature review into a case study research. Explanatory and exploratory strategy was combined as well as qualitative and quantitative data collection such as oral interviews and written questionnaires. The case study was carried out at an accessory purchasing department at a large production company referred to as the “Focal company” in this thesis. Also, participating in the study were selected suppliers of the Focal company.</p><p>The literature review and the case study data was analysed which led to the results that:</p><p>• JIT and VMI can shorten lead time, improve quality and relationships if used properly, otherwise it can lead to increased inventory levels.</p><p>• Key factors for enabeling JIT and VMI are common goals, management commitment, accurate information and suitable software systems.</p><p>• Suitable suppliers for JIT and VMI are companies that have equal dependency and/or have interdependency and are willing and able to contribute to the competitive advantage of the buying firm.</p><p>• Supplier selection criteria are price, quality, delivery, flexibility, reliability organizational culture, structure and strategy.</p><p>• Implementation of JIT is not an option today at the Focal company.</p><p>• With a few IT-system updates, a little bit of education and training the Focal company and most of the suppliers in this study are ready for VMI.</p><p>• Because of the good balance of power and dependence in the relationships between the Focal company and their suppliers there is a good chance of a successful outcome.</p><p>• The Focal company’s rating criteria are well correlating with the literatures findings, which further support that they are ready to select suppliers for integrated relationships.</p>

This thesis develops a method to optimize the inventory-related performance of a VMI (Vendor Managed Inventory) in retailing environments, for two successive products with overlapping lifecycles, under stock-dependent demand. The study refers to existing research in different fields, such as inventory policies and VMIs, retailing of substitutable products, stock-dependent demands and product lifecycle management. However, no study encompassing all these research streams could be found, and thus an abductive approach is developed, aiming at building new theory. The thesis draws upon a case study at Sony Germany, which has started an ambitious VMI initiative with the largest retailer of consumer electronics products in Germany. First, stock and sales data available, along with insights collected among employees, is used to understand the key profit-drivers when lifecycles of the two products overlap, and a set of indicators is propounded to measure them. The pattern of sales in relation to inventories of the two products is studied, and results in the validation of the stock-dependent demand assumption, with demand following a Poisson distribution of parameter λ [on-hand stock]. Demand for the new product is also found to be negatively affected by stock levels of the old product, in an exponential way. Second, a model is built and a scenario- based simulation embedding the patterns previously established is performed to evaluate different strategies to steer the stock levels in the VMI. Scenarios are evaluated against the proposed set of indicators, but no scenario is found to over perform consistently the others. Nevertheless interesting patterns emerge and it is possible to relate the performance observed to specificities of scenarios and product contexts. Using the patterns identified, a set of guidelines is suggested, along with proposals for practical implementation.

Introduction: Nowadays beverage companies must focus on maintaining healthy finishedgoods inventory stocks in order to be able to decrease inventory costs, meet customerrequirements and to obtain competitive advantage. However many beverage SMEdon’t have an accurate planning and forecasting to manufacturing inventories. Thereforethey often face the problem of optimization in inventory management due to several differentreasons. As a result, company loses its competitiveness. Thus, there is a need tocoordinate Inventory activities of beverage SMEs to improve inventories’ planning. The purpose of this study is to analyze how inventory management is organized in a small Chinese beverage company. Frame of reference: This research is based on the theoretical framework relates with InventoryManagement (IM) and Retailer-managed inventory (RMI), vendor-managed inventory(VMI) and Collaborative Planning, Forecasting and Replenishment (CPFR).Empirical Data were collected through personal interviews and organization documents. Methodology: The research strategy for this paper is a single case study. This strategy allows investigating topic in its real life context. The inductive approach is used for this research based on qualitative data. The major source of data collection was semi-structured interviews and the company's documents. For analyzing data categorization approach was applied. Conclusion: The study found that inventory management theories presented in scientificliteratures are used in practice. To achieve better inventory management for beverageSMEs, the authors summarize four importance parameters based on literatures and findings.The authors also provide some suggestions based on the importance parameters inthe conclusion to optimize the case company’s inventory management.

Business Administration, Business Process and Supply Chain Management Degree Project (master), 15 higher education points, 4FE06E, Spring 2013 Authors: Jeremy Bellina, Olegs Bodins, Soeren Krieger and Mathilde Olivier Tutor: Roger Stokkedal Title: Managing Upstream Supply Chain in Order to Decrease Inventory Level: A Case Study on the Paper Merchant Papyrus Sweden. Background: The research is based on Papyrus Sweden, a paper merchant, which is facing a decrease in the demand of paper products. It was identified that inventory level reduction is now crucial for the company in order to stay in the market. Therefore, Papyrus Sweden is focused on inventory level and tied-up capital reduction in order to decrease costs and increase net profit. Purpose: This thesis aims to analyze the current situation in Papyrus Sweden in terms of inventory level and activities related to suppliers, and prepare recommendations which could help Papyrus Sweden to reduce its inventory level. Method: The data has been collected through interviews with managers from the supply chain department as well as through a data sample from Papyrus Sweden database given to the researchers. All data was analyzed and compared with the literature review. Data received from the database was processed and transformed in Microsoft Excel in order to make the analysis. Results: The analysis identifies issues in material planning methods, safety stock calculation, ABC-XYZ classification and forecast calculation, on which Papyrus Sweden could act in order to decrease its inventory level. Furthermore, the researchers identify two solutions Papyrus Sweden could implement with its suppliers in order to reduce inventory level which are a Service Level Agreement and a Vendor Managed Inventory system. Keywords: inventory level, material planning method, safety stock, ABC-XYZ classification, forecast calculation, replenishment lead time, supplier relationship, information sharing, Service Level Agreement (SLA), Vendor Managed Inventory (VMI) and Collaborative planning, forecast and replenishment system (CPFR).