Which of the following performance indicators can be used to measure the effectiveness of a...

The in-stock rate is a key performance indicator used to measure the effectiveness of a vendor-managed inventory (VMI) program. Here’s a detailed explanation:

In-Stock Rate Definition: The in-stock rate is the percentage of time that a product is available in inventory and ready for sale or use. It indicates the ability of the inventory management system to meet customer demand without stockouts.

Importance in VMI:

VMI Program: In a VMI setup, the vendor is responsible for managing and replenishing inventory levels based on the real-time demand data shared by the retailer or customer.

Objective: The main goal is to ensure that the right products are available at the right time, minimizing stockouts and overstock situations.

Effectiveness Measurement:

Availability: A high in-stock rate means that the products are consistently available, indicating effective inventory management by the vendor.

Customer Satisfaction: High product availability leads to better customer satisfaction as it reduces the likelihood of missing sales due to stockouts.

Operational Efficiency: Maintaining a high in-stock rate while minimizing excess inventory demonstrates the vendor’s efficiency in managing the supply chain and understanding demand patterns.

Performance Tracking:

Continuous Monitoring: Regular monitoring of the in-stock rate helps in identifying trends and making necessary adjustments to inventory levels.

Benchmarking: Comparing in-stock rates over time or against industry standards can help in assessing the overall effectiveness of the VMI program.

References

Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2008). Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies.

Stevenson, W. J. (2018). Operations Management.