Vendor‐managed‐inventory (VMI) in construction

Abstract

Purpose

The purpose of this paper is to describe the challenge of managing logistics at corporate level in construction industry; and to present and evaluate vendor‐managed‐inventory (VMI) as a potential solution for small item logistics.

Design/methodology/approach

The study has a design science approach. It describes and tests a possible solution design for small item logistics in construction.

Findings

The paper finds that VMI is an efficient solution for small item logistics at construction sites, provided that it is well designed and movable. When the construction company owns the solution, it can more potentially be a corporate‐wide solution.

Research limitations/implications

The VMI solution is tested at only three pilot sites, so there might be many situational factors affecting its feasibility that could not be observed.

Practical implications

The proposed solution is potentially a major step in moving from site‐by‐site logistics towards corporate level logistics management in construction industry.

Originality/value

The VMI solution presented in this paper is unique for construction industry. The study indicates that it improves significantly the effectiveness of small item logistics in construction. More generally, the value of the paper is in combining horizontal integration (across sites) and vertical integration (supply chain) views in designing logistics solutions for construction industry.

Citation

Tanskanen, K., Holmström, J., Elfving, J. and Talvitie, U. (2009), "Vendor‐managed‐inventory (VMI) in construction", International Journal of Productivity and Performance Management, Vol. 58 No. 1, pp. 29-40. https://doi.org/10.1108/17410400910921065