The Application of Vendor Managed Inventory (VMI) as Improvement Tool in Manufacturing

The paper examines the growing pressure on manufacturing firms towards reduction of costs, continuously innovating services and products, and faster response time to address global competition in the marketplace that has resulted in firms adopting towards more lean and agile approaches. The study aims to analyse the proposition of Vendor Managed Inventory (VMI) to ABC Ltd to reduce excessive inventory from suppliers located in China. Research extends the details of current issues, proposed process changes when executing VMI program, and the potential benefits and problems that can be attained to both ABC Ltd and the offshore suppliers. A series of propositions are being engaged to show how VMI can be a successful improvement tool and not just an accounting issues if the involvement of the management practice is enough into the process changes. The findings are examined through existing research, to deliver ABC Ltd the solutions that will achieve optimal inventory policies.