How inventory consignment programs can improve supply chain performance: a process oriented perspective

Abstract

Inventory Consignment (IC) has largely been viewed as a method of shifting the ownership and cost burden of inventory from buyer to supplier to benefit the buyer. This primarily accounting based viewpoint has largely ignored process changes that can occur for both the buyer and supplier. This study addresses this gap in the extant literature by examining IC from a process perspective by specifically addressing: (1) the implementation issues in an IC program for both buyers and suppliers and (2) the financial and operational benefits from IC for both buyers and suppliers. Using the case study methodology, we examined three firms that had varying degrees of involvement and roles in IC programs. Based on our detailed work with these three firms and their supply chain linkages, we offer a series of propositions to demonstrate that IC is not just an accounting issue, but also a management practice that requires a series of process changes in order to be successful. These process changes in turn provide operational benefits for both buyers and suppliers via the mechanism of increased demand visibility to suppliers. Through this approach, this study makes a contribution beyond what has been examined in the prior literature which has mostly dealt with IC as an accounting based inventory management issue.

Improving Supply Chain Management of a Distribution Firm Using ERP System

“…The supply chain management is a procedure for controlling the data flow, products (property) as well as services in-between and within the organizations and also makes the firm ties among the consumers and suppliers. In accordance with the Mzoughi and the other (2008), the supply chain management articles depends upon the strategic management, logistics, strategies, partnerships as well as marketing [3] [21]. The comprehension of HR management expands to all distribution as well as transporting services which acquire the whole logistics phenomena and increases the supply unit.…”

“…There are several advantages of an ERP system, that consists of standardization of the organizational methods, incorporation of the amenities and facts, mechanization of the exchanging procedures, enhancing the elasticity, decreasing the number of employees, building up the system of universalization as well as finding a solution to a problem. ERP system provides a competitive advantage to a logistic chain by integrating the information system [21]. The organizational performances and ongoing competitive benefit are the basis for SCM practices and ERP systems.…”

“…The vendors of an ERP system and the advisor aiding in providing standard to the application which will provide the guarantee to the customers, and will be notifying the users as well. However, system quality is affected by the selection of the right system, and service quality is affected by the accurate vendor of software choosing and the influences upon consultants as well [21]. Individual impression and impact of an organization are not related in the circumferences of an ERP system.…”

“…The supply chain management is a highly efficient strategy for sustaining the competitive advantage and the productivity of firm [16] [21]. For obtaining a good competitive position, the supply chain management is an approach which purposes for reducing the costs as well as providing the good linking of production as well as distribution systems and for enhancing the customer satisfaction [1][26] [35].…”

“…For increasing the flexibility as well as the proficiency of organization, it requires for implementing the strategies of supply chain management [2][3] [20]. The actions related to supply chain management have a great influence upon the performance of organization and the competitive advantage of organization [21]. The ERP system as well as Supply Chain Management works as efficient tools for the enhancement of organizational performance and give a continuing competitive advantage.…”