An Assessment of Vendor-Managed Inventory (VMI) in Manufacturing Firms: A Case Study of Flour Mills of Nigeria in Kano State
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Background of the Study
Vendor-Managed Inventory (VMI) is a supply chain management strategy where the supplier takes responsibility for managing the inventory levels of a buyer. This collaborative approach aims to optimize inventory management, reduce stockouts, minimize excess inventory, and streamline the overall supply chain process. Flour Mills of Nigeria, one of the leading manufacturing firms in Nigeria, has implemented VMI in various segments of its operations, particularly in the procurement and management of raw materials and finished goods. The company, headquartered in Kano State, faces significant challenges related to inventory management due to the volatile nature of supply and demand in the manufacturing sector (Abubakar & Sulaimon, 2023).
VMI has been increasingly recognized as a method to reduce the costs associated with excess inventory and improve supplier relations. It is particularly relevant in industries where demand is unpredictable, and the cost of carrying inventory is high. Flour Mills of Nigeria, which produces a wide range of food products, requires a sophisticated inventory management system that can adapt to market fluctuations while ensuring efficient operations. The successful implementation of VMI in the company could lead to improvements in product availability, cost savings, and better alignment with customer demand (Olaniyi & Obasanjo, 2024).
The study aims to assess the effectiveness of VMI in Flour Mills of Nigeria’s inventory management practices, focusing on how it influences operational efficiency, cost reduction, and overall supply chain performance in the manufacturing industry in Kano State.
Statement of the Problem
Despite the potential benefits of VMI, there are limited studies on its implementation in Nigerian manufacturing firms, particularly in the context of Flour Mills of Nigeria in Kano State. The problem lies in understanding how VMI can be leveraged to optimize inventory management in the company and assessing its effectiveness in terms of operational efficiency, cost reduction, and supplier collaboration. The challenges associated with implementing VMI, such as data sharing and trust between vendors and buyers, need to be addressed to determine its full potential in improving supply chain operations.
Objectives of the Study
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To assess the effectiveness of VMI in inventory management at Flour Mills of Nigeria in Kano State.
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To examine how VMI influences cost reduction and operational efficiency in the company’s supply chain.
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To identify challenges and opportunities associated with the implementation of VMI in the manufacturing sector.
Research Questions
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How does VMI contribute to inventory management at Flour Mills of Nigeria in Kano State?
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What impact does VMI have on cost reduction and operational efficiency in Flour Mills of Nigeria?
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What are the challenges and opportunities of implementing VMI in the manufacturing sector?
Research Hypotheses
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VMI significantly improves inventory management at Flour Mills of Nigeria in Kano State.
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VMI leads to cost reduction and operational efficiency improvements at Flour Mills of Nigeria.
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Challenges in implementing VMI negatively impact the effectiveness of inventory management at Flour Mills of Nigeria in Kano State.
Scope and Limitations of the Study
The study will focus on evaluating the role and effectiveness of VMI in inventory management at Flour Mills of Nigeria’s operations in Kano State. Limitations may include difficulties in obtaining confidential data on inventory levels, supplier agreements, and financial metrics due to the proprietary nature of such information.
Definitions of Terms
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Vendor-Managed Inventory (VMI): A supply chain strategy in which the supplier assumes responsibility for managing the inventory levels at the buyer’s location (Abubakar & Sulaimon, 2023).
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Inventory Management: The process of overseeing the flow of goods and materials in and out of a business to ensure optimal inventory levels are maintained (Olaniyi & Obasanjo, 2024).
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Operational Efficiency: The ability of an organization to optimize its processes and resources to produce goods or services with minimal waste and maximum output (Olaniyi & Obasanjo, 2024).
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