Affiliated Organization

Helsinki School of Economics, Finland


The increased emphasis placed on the management of supply chains during the last decades has given rise to a large number of initiatives and collaborative practices in the area of inventory and demand management. One of the prominent practices in the area is Vendor Managed Inventory (VMI) systems, in which the responsibility for the management of customer’s inventory is reallocated from the customer to the vendor. From the literature as well as practice, many collaborative practices and partnerships can be identified that significantly differ from one another, yet have been labeled as VMI systems. For us to be able to study and manage the different types of VMI systems, measures enabling their evaluation, categorization, and comparison with each other are needed. To address this need, this paper first proposes and defines six elements that are considered as the main dimensions differentiating VMI systems from one another, which are: inventory location, distribution model, inventory level monitoring anddemand visibility, role of information systems, replenishment decision, and inventory ownership. After this the elements are combined together to propose an evaluationframework for VMI systems to facilitate the research as well as the management of VMI systems.