Inventory inaccuracy and performance of collaborative supply chain practices
| DOI | https://doi.org/10.1108/02635570810868353 |
| Pages | 495-509 |
| Date | 25 April 2008 |
| Published date | 25 April 2008 |
| Author | Kazim Sari |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Inventory inaccuracy
and performance of collaborative
supply chain practices
Kazim Sari
Department of International Logistics and Transportation,
Beykent University, Istanbul, Turkey
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 pract ice is a collaborative planning, forecast ing, 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 – Thisanalysis 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.
Keywords Supply chain management, Supplier relations,Simulation
Paper type Research paper
1. Introduction
Shorter product life cycles, increased product variety, and better-informed customers
have raised the competitive pressure in most industries. To excel in this competitive
environment, companies must design and operate materials management and product
distribution functions effectively. Literature on supply chain management (SCM)
contains significant research studies on how a company can achieve effective
management of these operations (Faisal et al., 2007; Simchi-Levi et al., 2008, p. 5).
Indeed, all these works show that uncertainty inherent in procurement, manufacture,
and distribution makes successful management of these operations extremely difficult.
For example, we see that in spite of advances in communications and information
technologies, nearly 50 per cent of the inventory records at a leading retailer are
inaccurate (Kang and Gershwin, 2005). Moreover, we also observe that with the
The current issue and full text archive of this journal is available at
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Supply chain
practices
495
Received 19 December 2007
Revised 6 January 2008
Accepted 25 January 2008
Industrial Management & Data
Systems
Vol. 108 No. 4, 2008
pp. 495-509
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635570810868353
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