Supply Chain Management: Warehousing
Liberty University
Author Note
Authors Purpose
The authors of Sharma and Singhi in the article titled Logistics and Supply Chain
Management Quality Improvement of Supply Chain Process Through Vendor Managed
Inventory: A QFD Approach. Journal of Supply Chain Management Systems use a questionnaire
and different graphical examples to try and created a Quality Force Deployment approach to
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build the case for the Indian healthcare system to implement a vendor managed inventory system
for its supply chain system (Sharma & Singhi, 2018). This approach is different from the current
system that the healthcare system uses in India and they wanted to conduct a study to see what
managers valued and felt in regards to the possible transition. The purpose in the end is to show
that a vendor managed inventory system would address the areas the managers valued from the
survey.
Background of the Issue
The Indian healthcare system is outdated in the terms of conducting supply chain
management. The system relies on individuals doing inventories and scheduling orders of
supplies. This has caused instances where there is supplies out of stock and also currently
operates with too many different brands being stocked. The vendor managed inventory system
on the other hand has shown great success for several different companies. The textbook this
week gave the example of Procter & Gamble (P&G) and Walmart utilizing the vendor managed
inventory system. When Walmart and P&G went into an agreement in 1985 the on time delivery
rate for P&G went up and the inventory turn over rate for Walmart increased as well (Liberty
University Custom, 2020). The healthcare system is having the same problems that P&G and
Walmart were having back in the 80s. There was too many people doing clerical duties and not
enough supply chain managers creating value for the organization. When industries are able to
leverage the expertise of other companies to their ability they free up resources to focus on what
they do best.
Application to Supply Chain Management
This study is applicable to the managers of companies on the fence of going to a vendor
managed inventory system. The study by Sharma and Singhi do a great job of laying out what
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areas managers value when moving to the new vendor managed system and how the vendor
managed system can add value to each area examined. Since the supply chain is ever expanding
for companies as customers expect more and more out of a business it is important for companies
to be able to maximize offerings by lowering costs to the consumer. The vendor managed
inventory system is a way for companies to do this. In regards to the healthcare industry one can
look to the same way that non-instantaneous deteriorating supplies are managed as well. Non-
instantaneous deteriorating supplies are supplies that have a short shelf life due to technological
advancements or fashion changes in the industry. This industry directly benefits from the vendor
managed inventory system as suppliers have a large data set to pull from as they typical supply
there product to multiple different distributors and can get a better pulse for their products verses
the storefront (Mahdavisharif et al., 2022). By applying the vendor management inventory
system, it takes away the guess work of when fads and changes will take place as the supplier
has these data points already from different market areas.
Managerial Implications
The advice I would give to managers after reading this article would be to put your
worries away when it comes to vendor managed inventory systems and embrace them if you are
thinking about switching up your supply chain system. The benefits that countless companies
have already reaped by switching over to the system should be a no brainer for managers on the
fence of switching over. The main article combined the effectiveness of a quality force
deployment chart to help explain to readers what management valued and what customers of the
industry valued as well. The end goal of vendor managed inventory systems is to prevent stock
outs and decrease the number of employees preforming clerical tasks that don’t add value to
business. I would advise managers to look at their current supply chain system and do an
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analysis of how many stock outs are currently happening and how much of the employee time is
spend on doing duties that don’t enable them to be innovative and forward thinking. If the
answer is an overwhelming number then going to a vendor managed inventory system is the
answer for your company.
However, another piece of advice to be shared is that a vendor managed inventory system
may not fix all your problems instantly. Kmart is a great example of this when they paired with
First Brand they originally had problems with the company keeping their requested inventory
levels on the shelfs (Liberty University Custom, 2020). It was only through communication
between the two partners that this was solved and both parties were able to fix the problem and
be financially better off then before. I would advise you be up front with whatever you choose to
go with for your vendor managed inventory system and set clear expectations of what is required
of them and follow up with them after the first couple of months to provide negative or positive
feedback for them. The key to any strategic alliance is to add value to one another’s bottom line
and if one party is not holding up their end of the deal than that alliance needs to be split or
restructured.
Summary
In review the article summed up what managers are concerned with for a possible
transition over to a vendor managed inventory supply system. This system should add value to
the business by preventing stock outs of their products and reducing over staffing of employees.
Another think the article does well is providing charts that shows what managers value with a
vendor managed inventory system. Finally, the article gives a recommendation to the healthcare
industry to adopt a vendor managed inventory system since it can save costs by reducing the
number of brands offered and decrease the number of employees doing clerical work. This article
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is helpful in explaining the different benefits of the vendor managed inventory system as a
whole.
References
Liberty University Custom (2020). Supply chain management (Custom ed.). New York, NY:
McGraw-Hill Create.https://bookshelf.vitalsource.com/books/9781307611458
Mahdavisharif, M., Kazemi, M., Jahani, H., & Bagheri, F. (2022). Pricing and inventory policy
for non-instantaneous deteriorating items in vendor-managed inventory systems: A
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stackelberg game theory approach. International Journal of Systems Science. Operations
& Logistics, , 1-28. https://doi.org/10.1080/23302674.2022.2038715
Sharma, N., & Singhi, R. (2018). Logistics and Supply Chain Management Quality Improvement
of Supply Chain Process Through Vendor Managed Inventory: A QFD Approach. Journal
of Supply Chain Management Systems, 7(3), 23-33.
https://go.openathens.net/redirector/liberty.edu?url=https://www.proquest.com/scholarly-
journals/logistics-supply-chain-management-quality/docview/2138650571/se-2
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