The impact of increasing demand visibility on production and inventory control efficiency
International Journal of Physical Distribution & Logistics Management
ISSN: 0960-0035
Article publication date: 1 May 2003
Abstract
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 manufacturer's 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.
Keywords
Citation
Småros, J., Lehtonen, J., Appelqvist, P. and Holmström, J. (2003), "The impact of increasing demand visibility on production and inventory control efficiency", International Journal of Physical Distribution & Logistics Management, Vol. 33 No. 4, pp. 336-354. https://doi.org/10.1108/09600030310478801
Publisher
:MCB UP Ltd
Copyright © 2003, MCB UP Limited