Environmental determinants of VMI adoption: An exploratory analysis

This study empirically examines the determinants of adoption of Vendor Managed Inventory programs that have recently gained popularity in many industries. To achieve this goal, survey scales are adapted and developed for buyer and supplier market competitiveness, product demand, buyer operational uncertainty, and buyer-supplier cooperation. Based on the analysis of responses from purchasing managers in three industries, structural equation modeling results suggest that the competitiveness of the supplier's market and buyer-supplier cooperation are positively associated with VMI adoption, while operational uncertainty for the buyer is negatively associated with VMI adoption. Managerial implications and limitations of the study are also noted.