Using VMI to improve supply chain performance of a public enterprise in Thailand

Supply chain management is well recognised and implemented in private sectors, but the beneficial of supply chain management in public sector is limited shown in the literature. This paper presents a comprehensive supply chain simulation study for a real case of Thai public sector focusing on its material supply network. The supply network consists of four stages in inventory system: head office, regional warehouse, main warehouse and service warehouse. This study aims to propose three different strategies according to the combination of purchasing structure and vendor managed inventory (VMI) with targeting to reduce lead time and cost. The discrete event simulation (DES) is a powerful tool used to reveal the supply chain performances. The three strategies result in shorter lead time and cost reduction. The decentralised purchasing with VMI on each echelon to support continuous replenishment offers the best solution. The managerial implication is provided to enable the enterprise to improve the supply chain performance measures.