The Effects of Unsuccessful VMI on Customer Attractiveness

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The Effects of Unsuccessful VMI on Customer Attractiveness

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Title: The Effects of Unsuccessful VMI on Customer Attractiveness
The International IPSERA Workshop on Customer Attractiveness, Supplier Satisfaction and Customer Value. 25-26 November 2010
Author: Ellegaard, Chris; Freytag, Per V.
Abstract: Reports on supply chain management (SCM) failure are becoming more frequent in the SCM literature, despite widespread recognition of the business potential associated with such optimizations of operational buyer-supplier interfaces. Some failures can be ascribed to imbalances in the net benefits realized by the buying and supplying company implementing SCM. Failed SCM initiatives hurt the buying company’s customer attractiveness and limit opportunities for long term value creation with suppliers. Hence, an important task for the buying company is the management of SCM initiatives in a way that benefits both parties. However, SCM costs and benefits often materialise as the result of complex interactive processes between buyer and supplier actors, which makes SCM a challenging management task. To increase the understanding of these complex processes, this study identifies the various types of supplier costs and benefits resulting from the failed VMI initiative of a multinational company. While the benefits from this case turn out to be few, the costs appear in large variety and scale. More importantly, we uncover the underlying mechanisms generating these costs, thereby enabling managers to identify and avoid the costs. Based on the findings, we propose pre-project classification of supplier VMI readiness to allow more beneficial implementation as a key managerial implication.
URI: http://hdl.handle.net/10398/8229
Date: 2011-01-05
Notes: Presented at: The International IPSERA Workshop on Customer Attractiveness, Supplier Satisfaction and Customer Value. 25-26 November 2010The International IPSERA Workshop on Customer Attractiveness, Supplier Satisfaction and Customer Value. 25-26 November 2010

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