Research On Vendor Managed Inventory Of Company W

VMI is a new inventory management method developed in response to increasingcompetition and changing market conditions and has been put to use by a number ofgiant multinationals and also widely applied in many fields. However, given that ithasn’t been long since this concept was first introduced to China, its application in thedomestic retailing is yet to be improved and the operation pattern and profitmechanism still need to be examined. The study of VMI’s application in retailing,therefore, demonstrates essential practical significance and vital urgency.In this essay, case analysis and model study are used. By carrying out a SWOTanalysis for one of the major retailing companies in China, W, we see greatimportance of VMI for it. We further analyze the differences between its inventorycosts as well as the affecting factors before and after VMI is applied in order to findout potential impacts VMI may have on W. The result shows that the differencebetween inventory costs is the main source of revenue for W and the supplier and thatresponsibility and benefit inconsistency is identified shortly after VMI’s application inboth parties. In consequence, we suggest the principle of allocation of risks andbenefits-sharing and use Stackelberg model and Wholesale Price Contract to designprofit distribution model. Organization structure, management mechanism andinformation construction, etc. are all considered when we are drawing up the VMIscheme for W.