Factors Influencing Supplier Selection for Vendor Managed Inventory Adoption in Hospitals

Hospital is one of the industries that relate to people’s health and welfare. Moreover, one of the most critical success factors in this business is quality and the delivery of drugs. This study applies the vendor managed inventory (VMI) for drug supply between distributors and hospitals. The vendor managed inventory is the main concept for gaining accurate information and information sharing from customers to suppliers for leading low safety stock levels, efficient inventory cost and a reduction of ordering cost. There are many vendors who supply pharmaceutical medicine products to the hospital. Therefore, the hospital manager needs to make a decision for selecting a qualified supplier in order to improve customer service level and patient satisfaction. This study develops the influencing weight of critical factors. There are the main factors in this study namely cost of the product, quality of product, delivery, service, supplier’s background, and Information technology which include seventeen sub-factors covers in hospitals. The weight of factors is developed by the Analytic Hierarchy Process (AHP) method. The critical factors for VMI adoption in different types of hospitals are illustrated. The key elements for developing VMI adoption for hospital are identified.