The economic and environmental benefits of VMI adoption in multi-retailer systems

Abstract

There is an increasing push towards integrating environmental considerations in decision making in organizations. Rethinking and realigning existing business processes has been touted to offer significant potential in reducing the ecological footprint. Specifically, the role of logistics and supply chain has come into prominence in this regard. In this chapter, a supply chain with a single vendor and multiple retailers has been considered. Initially, we assume that the retailers take care of their respective replenishment decisions. Then, it is shown that by adopting vendor managed inventory, the organizations involved can benefit through cost reduction, and at the same time reduce their greenhouse gas emissions, thereby highlighting the role of supply chain coordination in meeting the twin objectives. Managerial and policy insights based on our numerical analysis have also been provided. © 2016 by IGI Global. All rights reserved.