The Inventory Benefit of Shipment Coordination and Stock Rebalancing in a Supply Chain

In this paper, we examine two information-based supply-chain efforts that are often linked to Vendor-Managed Inventory (VMI) programs. Specifically, we consider a supplier serving multiple retailers located in a close proximity. The first effort uses information on the retailers' inventory positions to coordinate shipments from the supplier to enjoy economies of scale in shipments, such as full truckloads.The second effort uses the same information for eventual unloading of the shipments to the retailers to rebalance their stocking positions. How much benefit do we gain from such initiatives? What are the relative benefits of the two initiatives? What are the drivers of such benefits? This paper seeks answers to these questions.