It is well established that removing an echelon in a supply chain can be of great
benefit in improving dynamic performance (Wikner et al., 1991). This is
because there is potential for a two-fold improvement. This is first, due to
elimination of delays in both information and material flow. Second, a decisionmaking
activity that customarily increases distortion in the order waveform as
it is flows upstream is eliminated (Towill and del Vecchio, 1994). Vendor
managed inventory (VMI) is one practical way of seeking to obtain the benefits
of echelon elimination. Hence the need for a detailed investigation using the
traditional supply chain as a benchmark to be bettered via a suitable design. As
Maloni and Benton (1997) have indicated, there exists a large amount of
literature on the concepts of supply chain partnerships projecting extremely
optimistic views about their promise as win-win partnerships without any
rigorous analysis to support the cause of optimism. This paper is a response to
the shortfall in research that adopts a more rigorous analytical approach to
examine supply chain partnership issues.