A vendor-managed inventory (VMI) system can be used by a firm to lower inventory cost, increase the service level of materials supply, and satisfy the market demand. In this project, we select five dimensions and thirty research variables through reviewing the literature and visiting top managers of three Taiwanese TFT-LCD companies which have implemented VMI systems. This research draws a flowchart in which the relevant VMI operations are presented. In addition, a research framework is formulated. This study uses questionnaires to collect data from respondents in the three TFT-LCD companies and then analyzes it through formulating a theoretical structural equation model and solving the model using AMOS statistic software. The purpose is to explore the factors that affect the VMI performance and make comparisons among the three TFT-LCD companies on VMI performance. The results indicate that the proposed theoretical model has a high degree of goodness-of-fit and has been shown that it is correct. We also find that 1. Information technology and impact directly on the VMI performance. 2. Partnership has direct influence on the operational implementation. 3. VMI performance also affect directly on financial accounting.4.The degrees of partnership, information sharing, and demand stability impact significantly on the improvement of the VMI performance. Most importantly, the results of this empirical study are shown to be correct since they are extremely similar to the view points of practitioners and real-world practices. We expect to provide practitioners who plan to install VMI systems in the future with the experience of the three empirical cases.
