Essay: Vendor Managed Inventory
Can the Vendor Managed Inventory strategy solve the operational problems faced by Barilla?
Vendor Managed Inventory (VMI) strategy will help in solving the operational problems faced by Barilla since the biggest challenge for this firm is the fluctuation in demand. This strategy will ensure that the suppliers are responsible over the supply decisions since they will have to determine the inventory levels and the delivery frequency. This will ensure that the agreed upon stock levels are maintained for the suppliers will supply according to the required levels. VMI will also help the firm in tracking performance data for instance out-of-stock data and thus be able to order for it in time. With VMI, the firm will be able to reduce costs of distribution as well as manufacturing and inventory costs. It will further help the firm to decrease the risk, which may arise from out of stock situation in case demand fluctuates and thus increase customer services and sales.