Impact of information and communication technologies on logistics and freight transportation: Example of vendor-managed inventories

A framework to assess the impacts of information and communication technologies (ICTs) on supply-chain and logistics operations, including the movement of freight, is presented. The framework reflects transformation of the traditional supply chain into a virtually forged one and its link to the transportation sector. To illustrate and quantify cost savings that might result from information sharing among supply-chain participants, the example of a vendor-managed-inventory (VMI) strategy in a two-echelon distribution channel is considered. Models of operation with and without VMI are developed; the results of applying the two strategies to the same demand-stream characteristics allow assessment of the impact of ICT-enabled VMI logistics strategy. Reductions in total cost are achieved across all cases considered.