Vendor-Managed Inventory Boosts Sustainability in Reusable Packaging Supply Chains

Reusable packaging, such as returnable grocery crates, is a cornerstone of the circular economy, reducing waste and lowering carbon emissions. Yet, the logistics behind collecting, cleaning, and redistributing these items are complex. A major challenge lies in the unpredictability of returns: companies often lack visibility on when and where empty containers will be sent back. This uncertainty forces firms to maintain oversized crate pools, driving up costs and emissions.

Our newly accepted study in Transportation Research Part E: Logistics and Transportation Review investigates how vendor-managed inventory (VMI)—a strategy where the supplier manages not only its own stock but also customer inventories—can address this challenge. Using a mathematical model and extensive simulations of a European grocery crate network, we compared the current industry practice of request-based returns with a VMI approach where the supplier gains direct visibility into retailer inventories.

The findings are clear:

• Up to 22% lower operational costs can be achieved through VMI, largely because suppliers can better coordinate return collections and reduce the need to produce excess containers.
• Inventory stability improves significantly, meaning companies can operate with smaller pools while still meeting demand reliably.
• Hybrid networks—where some retailers adopt VMI while others stick to the traditional system—can still yield substantial benefits. The study shows that carefully selecting which retail nodes to integrate first is crucial: retailers located farther from depots and those with higher return volumes are the best candidates.

These insights are highly relevant for businesses and policymakers aiming to scale up reusable packaging systems in line with new regulations on waste reduction. They show that investments in supply chain transparency, such as RFID tracking, can be paired with smarter inventory management strategies to simultaneously lower costs, improve service, and reduce environmental impacts.

By quantifying these benefits, our research provides actionable guidance for companies navigating the transition to more circular and sustainable logistics networks.

Schoepf, V.; A.K. Strauss; M. Fleischmann (2025) 
Benefits of Vendor-Managed Inventory for the Reverse Logistics Operations of Returnable Transport Items
Forthcoming in Transportation Research Part E: Logistics and Transportation Review