Excess shelf space in retail stores : an analytical model and empirical assessment

Marketing and operations responsibilities meet in retail stores on the shelves. The shelf is the location where any product meets the consumer, whereas the shelf is also the final inventory location in the retail supply chain. Marketing assumes that the presence of inventory drives demand and therefore requires excellent operations. In operations, the main concern is with the trade-off between inventory holding cost on the shelf and the cost of replenishment. We gathered empirical data at a grocery retail chain and were able to combine marketing and operations data into a single database. This provided us the opportunity to conduct a unique analysis. We could compare the results of the space allocation decisions of the marketers with a basic analytic model that incorporates aspects of marketing and operations. Based on this comparison, we argue that significant amounts of excess shelf space exist for a large part of the assortment of a retailer. Excess shelf space is retail space that is not required to carry out the current operations with respect to customer service and costs. We also observed that the cost of replenishment is non-linear and dominates the inventory holding cost. Therefore, excess shelf space cannot easily be eliminated. Instead, excess shelf space in the presence of a non-linear cost of replenishment offers enormous opportunities for the development of new supply chain coordination mechanisms

Analyzing store features for online order picking in grocery retailing: an experimental study

[EN] The digital transformation is having a major impact on the consumer product market, pushing food retailers to foster online sales. To avoid large investments, e-grocers are tending to use their existing physical stores to undertake the online order picking process. In this context, these companies must choose in which traditional stores must prepare online orders. The aim of this study is to identify which store features affect order preparation times. The action research approach has been used at a Spanish e-grocer to analyze the characteristics that differentiate picking stores from each other; furthermore, the preparation times for a sample of online orders have been measured. The data were analyzed statistically using one-way ANOVA to define the optimal store in terms of size, assortment, backroom and congestion. The study shows that three of the four characteristics are significant on the preparation time. Therefore, e-grocers using a store-based model can use this information to focus their efforts on optimizing this process, assigning online order picking to the most appropriate stores. The approach used allows the study to be suitable for different retail context. Moreover, the results serve as support for strategic decision-making of researchers and e-grocers seeking to become more competitive in this continually growing market.Vazquez-Noguerol, M.; Riveiro-Sanroman, S.; Portela-Caramés, I.; Prado-Prado, JC. (2022). Analyzing store features for online order picking in grocery retailing: an experimental study. International Journal of Production Management and Engineering. 10(2):183-193. https://doi.org/10.4995/ijpme.2022.1720718319310

User-packaging interaction (UPI): A comprehensive research platform and techniques for improvement, evaluation, and design

Users are expected to interact with their packages through product life cycles with either good or bad experiences, depending on packaging design, which can be characterized by physical and verbal features, such as size, shape, symbols, picture, etc. User packaging interaction (UPI) field has evolved with the aim to provide user-friendly packages, which support performing tasks such as, opening, handling, disposing, and checking-out. A great deal of work addressing issues, related to packaging, and suggesting potential improvements has been directed toward UPI. However, this work is not easily accessible to researchers as it lacks a cohesive structure of UPI stages. Developing an efficient packaging design, which augments UPI, requires continuous evaluation and improvement considering UPI stages. In this dissertation, we consider the UPI field as a system of users who interact with packages and other components at different stages, and integrate concepts of human factors and systems engineering to improve this interaction. In the first study, an effort is directed to organize the field of UPI, in order to facilitate a proper and inclusive understanding of this field. The current research structure is organized based on stages of interaction, with insights into the related packaging features. This organization results in the enumeration of the following stages: at point of purchase, checking out, handling, opening, and disposal. The review process has revealed different issues in the current research structure of UPI including the comprehensibility of the conducted research and the distribution of the reviewed articles. In the second study, a stage of interaction was targeted for improvement while considering the involved packaging features. The implications of the Universal Product Code (UPC) placement and the scanning technology in use have been studied with a focus on scanning process at the checkout stage. This study has approved the effect of UPC placement and scanning technology on self-checkers. The results showed that total scanning time was significantly reduced when using bi-optic scanner F(1, 28) = 20.9, p \u3c 0.01, p2= 0.43. The recommended UPC placement led to a significant improvement on UPCs anticipation for both scanning technologies F(1, 28)= 16.8, p \u3c 0.01, p2= 0.38. Additionally, exposure to non-neutral trunk posture(s) were shown to be significantly decreased in the bi-optic condition F(1, 24)= 10.4, p \u3c 0.01, p2= 0.30. Understanding the tasks performed at a UPI stage with the involved packaging features can lead to a substantial operational and ergonomic improvements. In the third study, an affordance-based multi-criteria decision making (MCDM) model is also proposed to help designers simultaneously consider multi-UPI stages and packaging perspectives. The model is built based on the fact that affordances provided by packages can facilitate the interaction between users and packages. Affordance properties, elicited from user’s requirements, were utilized to evaluate packaging affordances at stages of UPI. The outcomes of the model are validated by a usability testing study with results supporting the ability of the model to distinguish between packages with different overall affordance levels. Finally, a design for affordances framework is introduced to map users\u27 requirements to packaging features, in such these requirements can be associated with affordance properties that facilitate packaging related tasks. The structure of the framework allows an affordance-driven design through linking users’ requirements for affordances and packaging features. An affordance structure matrix (ASM) was constructed to document the relationships between affordance properties and packaging features. The framework will help create alternative packaging designs while considering the link between affordance properties and packaging features. It can also locate the problems that lead to low affordance levels of packages and allow modifications on the features of impacts

An exploration of online fulfilment centres in omni-channel grocery retail

Grocery retail is going through a rapid shift and retailers are moving towards omni-channel. Omni-channel means that a retailer has multiple channels in which thecustomer can move seamlessly, with the back-end organised to make this possible.While the grocery-retail sector has started to see a rapid growth in online sales,omni-channel grocery retailers are struggling with profitability in their onlinechannels. For these retailers, efficient logistics and material handling are crucial toachieve profitability. Today, it is common for omni-channel grocery retailers toinvest in an online fulfilment centre (OFC) when volumes are growing. A keycomponent for improving profitability is thus to improve the OFC configuration (i.e.warehouse operations, design, and resource). Despite the important role that an OFCplays for omni-channel performance and profitability, extant research is lacking onhow to configure an OFC in omni-channel grocery retail. Hence, the purpose of thisthesis was to ‘explore how grocery retailers are configuring their OFCs and in whatway they adapt to specific challenges and context’

Design and optimization of an explosive storage policy in internet fulfillment warehouses

This research investigates the warehousing operations of internet retailers. The primary physical process in internet retail is fulfillment, which typically involves a large internet fulfillment warehouse (IFW) that has been built and designed exclusively for online sales and an accompanying parcel delivery network. Based on observational studies of IFW operations at a leading internet retailer, the investigations find that traditional warehousing methods are being replaced by new methods which better leverage information technology and efficiently serve the new internet retail driven supply chain economy. Traditional methods assume a warehouse moves bulk volumes to retail points where the bulks get broken down into individual items and sold. But in internet retail all the middle elements of a supply chain are combined into the IFW. Specifically, six key structural differentiations between traditional and IFW operations are identified: (i) explosive storage policy (ii) very large number of beehive storage locations (iii) bins with commingled SKUs (iv) immediate order fulfillment (v) short picking routes with single unit picks and (vi) high transaction volumes with total digital control. In combination, these have the effect of organizing the entire IFW warehouse like a forward picking area. Several models to describe and control IFW operations are developed and optimized. For IFWs the primary performance metric is order fulfillment time, the interval between order receipt and shipment, with a target of less than four hours to allow for same day shipment. Central to achieving this objective is an explosive storage policy which is defined as: An incoming bulk SKU is exploded into E storage lots such that no lot contains more than 10% of the received quantity, the lots are then stored in E locations anywhere in the warehouse without preset restrictions. The explosion ratio Ψo is introduced that measures the dispersion density, and show that in a randomized storage warehouse Ψoo\u3e0.40. Specific research objectives that are accomplished: (i) Develope a descriptive and prescriptive model for the control of IFW product flows identifying control variables and parameters and their relationship to the fulfillment time performance objective, (ii) Use a simulation analysis and baseline or greedy storage and picking algorithms to confirm that fulfillment time is a convex function of E and sensitive to Ǩ, the pick list size. For an experimental problem the fulfillment time decrease by 7% and 16% for explosion ratios ranging between Ψo=0.1 and 0.8, confirming the benefits of an explosive strategy, (iii) Develope the Bin Weighted Order Fillability (BWOF) heuristic, a fast order picking algorithm which estimates the number of pending orders than can be filled from a specific bin location. For small problems (120 orders) the BWOF performes well against an optimal assignment. For 45 test problems the BWOF matches the optimal in 28 cases and within 10% in five cases. For the large simulation experimental problems the BWOF heuristic further reduces fulfillment time by 18% for Ǩ =13, 27% for Ǩ =15 and 39% for Ǩ =17. The best fulfillment times are achieved at Ψo=0.5, allowing for additional benefits from faster storage times and reduced storage costs

C-130J Inventory Control Point Location Determination

Since the first C-130J delivery in 1999, Lockheed Martin has managed the USAF’s C-130J “peculiar” parts inventory at Keesler AFB. Now with 193 aircraft assigned to 17 operating locations across the globe, effective supply chain management and recognized cost savings are essential components to mission success and fleet longevity. Previous research within the area of location analysis has shown that minimizing the average weighted distance of shipping products can assist in cost reduction efforts. Due to this, the goal of this study is to determine if alternative CONUS C-130J locations can be utilized as the Inventory Control Point to help reduce total transportation costs for the fleet’s “peculiar” spares inventory. Using the 2017 FedEx Service Guide in conjunction with five years of historical shipping data, five alternative C-130J bases were evaluated in order to identify which of the locations could offer transportation cost savings. Additionally, inventory/personnel relocation and new infrastructure costs were collected to project pay-off periods for capital investment. Based on this analysis, Little Rock AFB is the only C-130J CONUS operating location which would reduce the total transportation costs. In conclusion, this research can drive cost effective warehousing prior to staging aircraft and establishing the full supply chain structure

Análisis de la gestión de inventarios y su efecto en los costos en empresas de servicios: una revisión de la literatura científica entre los años 2009 y 2019

Los inventarios representan parte económica importante de la empresa y su análisis de los problemas brinda una herramienta importante para la toma de decisiones acerca de las variables que afectan a los costos de la entidad. El objetivo de la investigación es conocer el efecto de la gestión de inventarios en los costos de las empresas del sector servicios. Para la realización de la investigación se hizo una revisión de la literatura científica en bases de datos como Scielo, Redalyc, Dialnet Plus, ScienceDirect y Google Académico, estableciendo criterios para su selección como el periodo de tiempo de 10 años de antigüedad como máximo, artículos científicos y estructura IMRD. Como resultado se determinó que la aplicación de herramientas como el costeo ABC y modelo EOQ de la gestión de inventarios genera una reducción del costo en un rango de 25% hasta 50% dentro de las organizaciones del sector servicios. Se concluye que la variable de gestión de inventarios y su repercusión en los costos de empresas de servicios es significativo, por lo que es importante su estudio al ser un factor principal en la competitividad de las empresas