Vendor-Buyer Collaboration in Supply Chain Management with Quality Inspection on the Buyer's Side

Document Type : Research Paper

Author

Department of Industrial and Systems Engineering, King Fahd University of Petroleum & Minerals, Dhahran, Saudi Arabia Interdisciplinary Research Center of Smart Mobility and Logistics, King Fahd University of Petroleum &

Abstract

Effective vendor-buyer collaboration is a successful supply chain management (SCM) cornerstone. By working together, both parties can achieve significant benefits. This collaboration approach fosters open communication, which allows for better communication, improved efficiency, service levels, and reduced costs, i.e., a win-win situation. Ultimately, this partnership strengthens the entire supply chain, increasing efficiency and profitability for vendors and buyers. This study aims to investigate the dynamics of collaboration between supply chain partners. It focuses on a scenario where a single vendor supplies a single product to multiple buyers through a vendor-managed inventory (VMI) and consignment stock (CS) agreement. Managing inventory and product quality is a key challenge, as the components may be imperfect. Buyers are responsible for inspecting these items, but the process is susceptible to misclassification. To address these issues, the research aims to develop an optimization model that incorporates costs associated with collaboration, quality, inspection, and potential misclassification. In addition, developing a methodology to identify the optimal solution minimizes overall costs and maximizes benefits for both vendors and buyers. Furthermore, a numerical example is presented for tangible illustration, offering practical insights into the benefits of partner collaboration in SCM. The findings underscore the efficacy of implementing a collaborative approach between vendors and buyers to minimize supply chain costs. This collaborative policy necessitates a willingness from both parties to forgo their individual cost-minimization strategies in favor of optimizing the overall system cost through cooperation. Through this sacrifice, synergistic benefits emerge, resulting in enhanced efficiency, reduced expenses, and improved overall performance within the supply chain ecosystem.

Keywords

References

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International Journal of Supply and Operations Management
Volume 11, Issue 3
August 2024
Pages 316-333

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