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Inventory inaccuracy and performance of collaborative supply chain practices

Inventory inaccuracy and performance of collaborative supply chain practices Purpose – This paper aims to explore the impact of inventory system inaccuracies on the benefits of collaborative supply chain practices under various supply chain scenarios. To achieve this purpose, two popular collaboration initiatives are considered in a four‐stage supply chain. The first practice is a vendor managed inventory program where the distributor takes the full responsibility of managing the retailer's inventory. The second practice is a collaborative planning, forecasting, and replenishment program where all members work together to plan, forecast, and replenish the product. Design/methodology/approach – The study utilizes Monte Carlo computer simulation in an experimental design. Findings – The analysis suggests that while the inaccurate inventory records result in significant performance reductions for all supply chain configurations, their impact is substantially greater for the supply chains where members collaborate more closely on key supply chain management activities. In addition, the author also realize that the adverse impact of inaccurate inventory information is stronger under the conditions where lead times are shorter and/or where demand uncertainty in market place is lower. Practical implications – This analysis provides a means for practitioners to realize the importance of inventory accuracy to successful adaptation of collaborative supply chain practices. Moreover, this research also helps in understanding the supply chain conditions where the attempts of eliminating or reducing errors in inventory information are more crucial and more beneficial. Originality/value – Although there is a range of research focusing on collaborative practices, none of these studies considered the errors in inventory information. This is the first study to investigate the impact of inaccurate inventory information on the benefits of collaborative practices. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Industrial Management & Data Systems Emerald Publishing

Inventory inaccuracy and performance of collaborative supply chain practices

Industrial Management & Data Systems , Volume 108 (4): 15 – Apr 25, 2008

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Publisher
Emerald Publishing
Copyright
Copyright © 2008 Emerald Group Publishing Limited. All rights reserved.
ISSN
0263-5577
DOI
10.1108/02635570810868353
Publisher site
See Article on Publisher Site

Abstract

Purpose – This paper aims to explore the impact of inventory system inaccuracies on the benefits of collaborative supply chain practices under various supply chain scenarios. To achieve this purpose, two popular collaboration initiatives are considered in a four‐stage supply chain. The first practice is a vendor managed inventory program where the distributor takes the full responsibility of managing the retailer's inventory. The second practice is a collaborative planning, forecasting, and replenishment program where all members work together to plan, forecast, and replenish the product. Design/methodology/approach – The study utilizes Monte Carlo computer simulation in an experimental design. Findings – The analysis suggests that while the inaccurate inventory records result in significant performance reductions for all supply chain configurations, their impact is substantially greater for the supply chains where members collaborate more closely on key supply chain management activities. In addition, the author also realize that the adverse impact of inaccurate inventory information is stronger under the conditions where lead times are shorter and/or where demand uncertainty in market place is lower. Practical implications – This analysis provides a means for practitioners to realize the importance of inventory accuracy to successful adaptation of collaborative supply chain practices. Moreover, this research also helps in understanding the supply chain conditions where the attempts of eliminating or reducing errors in inventory information are more crucial and more beneficial. Originality/value – Although there is a range of research focusing on collaborative practices, none of these studies considered the errors in inventory information. This is the first study to investigate the impact of inaccurate inventory information on the benefits of collaborative practices.

Journal

Industrial Management & Data SystemsEmerald Publishing

Published: Apr 25, 2008

Keywords: Supply chain management; Supplier relations; Simulation

References