An Adoption of Vendor Managed Inventory in Thailand Healthcare Industry

The concept of vendor managed inventory (VMI) radically changes a traditional inventory management. With regard to the traditional concept, customers make a replenishment decision. However, the VMI concept is that the responsibility for replenishment process is allocated from the customer to the suppliers. As it requires both trading partner sharing more information; therefore, this contributes to the increasing in collaboration and integration between them. Additionally, there are advantages gaining from the adoption of VMI approach: reducing lead times, increasing inventory turns, improving service quality, reducing bullwhip effect and cost. As a consequence, many companies in different industries strive to adopt this approach. However, different industries and different stages of supply chain require different types of VMI. The aim of this paper is to investigate the characteristics of VMI and then define a common practice in healthcare industry. This paper is based on literature review and multiple case studies. The previous research, supply chain management in healthcare sector in Thailand, is also adopted in order to identify the stage of the VMI approach and then find out how to develop the approach. Ultimately the model will be launched as the VMI pilot model in healthcare industry in Thailand.