Johanna Småros

The impact of increasing demand visibility on production and inventory control efficiency

Information sharing practices such as vendor‐managed inventory (VMI) give manufacturers access to more accurate demand information, e.g. customer sales data, than before. The value of this type of information sharing has been established in many studies. However, most of the research has focused on the ideal situation of the manufacturer having access to information from all downstream parties. In practice, this is rarely the case. In this paper, discrete‐event simulation is used to examine how a manufacturer can combine traditional order data available from non‐VMI customers with sales data available from VMI customers in its production and inventory control and what impact this has on the manufacturers operational efficiency. The simulation model is based on a real‐life VMI implementation and uses actual demand and product data. The key finding is that even for products with stable demand a partial improvement of demand visibility can improve production and inventory control efficiency, but that the value of visibility greatly depends on the target products’ replenishment frequencies and the production planning cycle employed by the manufacturer.

Viewpoint: reaching the consumer through e‐grocery VMI

Current e‐grocery models are based on the consumer making his or her purchase over the Internet, and the e‐grocer delivering the purchase to the household. However, there are numerous opportunities for innovative new services. Analyzes the opportunities offered by bar code and radio frequency identification (RFID) technology to develop a new type of e‐grocery related service, namely vendor‐managed inventory (VMI) in the household. In assessing the opportunity for extending the value offering of an e‐grocery business to VMI in the household a number of key operational issues are addressed, i.e. data capture, solution robustness and cost saving potential in the supply chain. The analysis indicates that the development of new value offerings such as VMI is critical if e‐grocery businesses are ever to gain a competitive advantage over traditional retail formats.

Collaborative forecasting: A selection of practical approaches

The Collaborative Planning Forecasting and Replenishment (CPFR) process model developed by the Voluntary Inter-industry Commerce Standards (VICS) association has received significant attention from both practitioners and academics. However, despite promising pilots, the adoption rate of CPFR has been slower than expected, especially in Europe. The reason seems to be that the proposed collaboration process is currently too labour-intensive for many companies. There is a need for streamlined approaches to get collaboration started in Europe. This paper presents a case study involving a supplier and a retailer collaborating to increase the retailers forecasting accuracy for new product introductions. The approach is based on creating one forecast that is then shared within the supply chain. Three other streamlined approaches to planning and forecasting collaboration are also presented on a more general level. Finally, there is a discussion as to how the product life cycle model can be used to select and combine the most suitable approaches to collaboration in different market situations.

Patterns of vendor-managed inventory: findings from a multiple-case study

Purpose – This paper aims to address two questions: what kinds of benefits are realized from a vendor‐managed inventory (VMI) program (operational, i.e. efficiency related, vs strategic, i.e. sales related) and how the benefits are shared at the dyad level (suppliers vs buyers).Design/methodology/approach – The paper uses an exploratory multiple case study with data from five operational VMI dyads, evaluating both buyer and supplier perspectives.Findings – Three empirically grounded patterns of VMI are proposed. Five contextual inhibitors of VMI impacts are suggested.Research limitations/implications – The framework presented has been generated from a relatively small number of cases. Threats to external validity have been mitigated with case selection from multiple operational contexts and grounding findings in prior literature.Practical implications – Using the conceptualization, potential VMI adopters can set more realistic and explicit implementation targets. The suggested contextual factors will help...

The effect of demand visibility in product introductions

Purpose – Aims to examine the value of manufacturer access to downstream demand information in managing product introductions and to Identify factors affecting this value.Design/methodology/approach – Simulation based on actual data on 19 product introductions is used for comparing different types of demand information and their usefulness to a manufacturer. Two metrics are introduced. Bias indicates if there is a consistent difference between demand information from two sources. Delay in demand synchronization measures how long it takes for demand information from two sources to start conveying demand similarly in a transient situation.Findings – Finds that, in the supply chain examined, demand variability is mainly induced by distributors, whereas bias and delay in demand synchronization are mainly induced by retail outlets, especially for products with large wholesale packages compared with their sales.Research limitations/implications – The simulation model is simple and does not enable realistic exam...

Collaborative supply chain configurations: The implications for supplier performance in production and inventory control

Changing how and when a supplier delivers a product can transform a business model (Hoover et al., 2001). Vendor managed inventory (VMI) is one such mechanism that has been popular in recent literature (Holmstrom, 1998; Sabath et al., 2001). Unfortunately, however, practical examples of how VMI and other collaborative supply chain configurations can be precisely used to improve production planning and inventory control in supplier firms are difficult to find in industry. For example, the scope of standard solutions for VMI in commercial enterprise resource planning applications does not include recommendations for linking the replenishment collaboration to production and inventory control.

Using the assortment forecasting method to enable sales force involvement in forecasting: A case study

The paper presents how a European pick‐and‐mix confectionery company has employed a new forecasting approach – assortment forecasting – to reduce significantly time spent on forecasting by working with an entire assortment at a time instead of producing a forecast for each product individually. The implementation of a less time‐consuming forecasting method has enabled the company to involve its salespeople in forecasting and in this way gain access to their product and market knowledge. The case companys implementation of the new forecasting method is described and its forecasting accuracy and time spent on forecasting before and after the implementation are measured. The results demonstrate a remarkable increase in forecasting efficiency as well as improved communication within the company.

Information sharing for sales and operations planning: Contextualized solutions and mechanisms

We develop actionable design propositions for collaborative sales and operations planning (S&OP) based on the observation of contexts in which benefits are generated — or are absent — from retail information sharing for a manufacturer. An information sharing pilot project in a real-life setting of two product manufacturers and one retailer was designed. The project resulted in one manufacturer, serving a retailer from its local factory, developing a process for collaborative S&OP, while the other manufacturer serving a retailer from more distant regional factories abandoned the process. The evaluation of the outcomes experienced by the two manufacturers allows us to examine contexts in fine-grained detail and explain why introducing information sharing in the S&OP processes produce — or fail to produce — benefits. The paper contributes to the supply chain information sharing literature by presenting a field tested and evolved S&OP design for non-standard demand situations, and by a contextual analysis of the mechanisms that produce the benefits of retailer collaboration and information sharing in the S&OP process.