Vendor‐managed‐inventory (VMI) in construction

Abstract Purpose – The purpose of this paper is to describe the challenge of managing logistics at corporate level in construction industry; and to present and evaluate vendor‐managed‐inventory (VMI) as a potential solution for small item logistics. Design/methodology/approach – The study has a design science approach. It describes and tests a possible solution design for small item logistics in construction. Findings – The paper finds that VMI is an efficient solution for small item logistics at construction sites, provided that it is well designed and movable. When the construction company owns the solution, it can more potentially be a corporate‐wide solution. Research limitations/implications – The VMI solution is tested at only three pilot sites, so there might be many situational factors affecting its feasibility that could not be observed. Practical implications – The proposed solution is potentially a major step in moving from site‐by‐site logistics towards corporate level logistics management in construction industry. Originality/value – The VMI solution presented in this paper is unique for construction industry. The study indicates that it improves significantly the effectiveness of small item logistics in construction. More generally, the value of the paper is in combining horizontal integration (across sites) and vertical integration (supply chain) views in designing logistics solutions for construction industry.