The impact of vendor managed inventory on transport operations

The impact of vendor managed inventory on transport operations

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Article ID: iaor20041925
Country: United Kingdom
Volume: 39
Issue: 5
Start Page Number: 363
End Page Number: 380
Publication Date: Sep 2003
Journal: Transportation Research. Part E, Logistics and Transportation Review
Authors: , ,
Keywords: transportation: road
Abstract:

This paper investigates the impact of a vendor managed inventory (VMI) strategy upon transportation operations in a supply chain. Specifically, the issue of batching to enable better use of transport vehicles is studied. A system dynamics methodology is used to develop difference equation models of three scenarios – traditional, internal consolidation and VMI. The holistic nature of inventory management within VMI enables batching to minimise transport demand without negatively impacting the overall dynamic performance of the supply chain. Using the concept of cost escapability, it is shown that transport cost savings are possible in both the short and long term.

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