Collaborative Inventory Replenishment: Discussions and Insights of a Cost-Effective Alternative for Noncompetitive Small- and Medium-sized Enterprises

Abstract

This chapter discusses a collaborative strategy for noncompetitive small- and medium-sized enterprises (SME's) aiming to reduce their logistics costs by means of a joint replenishment of multiple items. The proposed approach is an extension of the classical joint replenishment problem, named as a Stochastic Collaborative Joint Replenishment problem (S-CJRP) because it considers stochastic demand, warehouse and transport capacity constraints, and multiple buyers and vendors. Operating this method implies three main challenges: (1) determining the frequency with which each buyer should replenish the products; (2) allocating investments and benefits between partnering buyers; and (3) deciding whether to coordinate the supply chain internally or outsource its coordination. The S-CJRP is solved through a heuristic approach, which deals with uses of the Shapley Value Function to allocate the investments and benefits, and it explores the coordination through several simulation scenarios, all of which exhibit prospective cost reductions in inventory management. Preliminary results show that third-party logistics providers could be a valuable resource in coordinating SMEs along a supply chain.

Citation

Otero-Palencia, C., Amaya-Mier, R., Montoya-Torres, J.R. and Jaller, M. (2020), "Collaborative Inventory Replenishment: Discussions and Insights of a Cost-Effective Alternative for Noncompetitive Small- and Medium-sized Enterprises", Yoshizaki, H.T.Y., Mejía Argueta, C. and Mattos, M.G. (Ed.) Supply Chain Management and Logistics in Emerging Markets, Emerald Publishing Limited, Leeds, pp. 215-234. https://doi.org/10.1108/978-1-83909-331-920201010