Vendor managed inventory adoption in Malaysia construction industry

The growth of the Malaysian construction industry is burdened by conditions in which 'time overruns' in projects still exist. The quest to overcome construction delays motivates the industry to improve its performance by learning from the other industries. Supply chain management is an important aspect of performance in construction projects recognised by literatures in recent years. The distinctive characteristic of supply chain management in construction does compare to other industries to motivate the need to collaborate horizontally and vertically within the construction industry. Vendor- managed inventory (VMI), famous for eliminating additional costs that may result from the excessive supply and stock-in-hand inventory as practised in other industries, may potentially be adopted and implemented in the construction industry. Therefore, conditions in which VMI is suitable to be adopted, barriers to the effort to adopt VMI and the readiness of the contractors to adopt VMI were evaluated in this study. The results of the survey using 97 ClDB grade G7 registered contractors in Malaysia, show that suppliers' market competition, supplier-buyer cooperation, and demand uncertainty positively influence the intention of contractors to adopt VMI. However, notwithstanding that G7 contractors are large contractors in Malaysia, perceived lack of trust and mutual misunderstanding between supply chain partners are considered top among the many barriers to adopt VMI despite evidence that respondents of the study indicate moderate to high readiness to adopt the recommendations of the study. The study contributes to literature on VMI in the area of the construction industry which has not been explored comprehensively.