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A feasibility study of the vendor managed inventory concept
2006 (English)Independent thesis Advanced level (professional degree), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

This master's thesis is a part of a feasibility study of the Vendor Managed Inventory (VMI) concept in the supply chain between Stora Enso Timber's (SET) Component Mill in Ala, Sweden and Elitfönster (Elit) in Lenhovda, Sweden. SET delivers wood components to Elit. Elit machines components to parts and these parts are then assembled to window sashes and frames. VMI is a concept with the main idea of improving the information flow. By doing so, it is possible to decrease the demand variability (bullwhip effect), increase the service level and decrease the stock levels. The objectives of this thesis are to: • Create a process description of the business processes between SET and Elit and estimate the organizational readiness for VMI implementation. • Calculate the demand variability (bullwhip) in the supply chain. • Calculate the potential stock reduction at Elit if implementing VMI. The conclusions are: • The present relationship between SET and Elit is regarded to be on such a level that implementation of VMI is possible. • There is bullwhip in the supply chain. The average bullwhip through the component stock and part stock echelons is 3.6 for the three products studied. This means that the size of the orders of components from Elit to SET varies 3.6 times more over time than the output of parts from Elit Lenhovda's machining department. Several independent researchers have shown that VMI is an efficient way to decrease the bullwhip effect in a supply chain. The conclusion is that this is applicable also to the SET - Elit supply chain. Reduced average stock levels can be expected as a result of the bullwhip reduction. • The stock reduction at Elit with VMI is calculated to 50 % for the three products studied. Other logistic costs such as transportation costs and warehousing costs are not expected to increase. The service levels are expected to be unaffected or even increase since more focus is put on monitoring the service levels when running VMI. The VMI model used for the calculations may presently have some shortcomings and further calculations are needed to verify the result.

Place, publisher, year, edition, pages
Keyword [en]
Technology, Vendor managed inventory, VMI, Supply chain management, Bullwhip effect, Stock reduction
Keyword [sv]
URN: urn:nbn:se:ltu:diva-45904ISRN: LTU-EX--06/052--SELocal ID: 38d24313-f9fb-46e3-8eed-dac0db26b6d6OAI: diva2:1019205
Subject / course
Student thesis, at least 30 credits
Educational program
Wood Engineering, master's level
Validerat; 20101217 (root)Available from: 2016-10-04 Created: 2016-10-04Bibliographically approved

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