Optimizing the distribution network of perishable products to Small Format Stores

Thesis (M. Eng. in Logistics)--Massachusetts Institute of Technology, Engineering Systems Division, 2012.Cataloged from PDF version of thesis.Includes bibliographical references (p. 66-67).FoodCo is a leading foods company that has reputed brands and global operations with revenues in excess of USD 5Bn. Although FoodCo's sales to Small Format Stores (SFS) customers are a small part of the overall sales, it is a fast growing segment where FoodCo sees future. However, distribution to the SFS channel is a challenge - FoodCo needs to ship refrigerated and frozen products to over 40,000 stores through multiple distributors. Furthermore, such stores are characterized by low sales velocity relative to traditional retailers. The transactional nature of FoodCo's supply chain relationship with channel partners creates challenges for FoodCo in influencing key decisions in the supply chain. To tackle the problem, the authors reviewed the literature and interviewed experts and practitioners to understand best practices in Consumer Packaged Goods (CPG) companies across the world serving SFS. Although there were few direct parallels, collaboration was found to be a practice that successful companies employed. The authors also analyzed data including store sales, orders to FoodCo, promotions and supply chain costs, etc. They created a quantitative model that suggested that fees paid out to distributors for their full service are not proportional to the costs. They also concluded that FoodCo's lack of visibility into the sell-through demand made it subject to a strong bullwhip effect, leading to large amounts of inventories and shrinkage. Further, they identified that store sales were scattered geographically and that direct shipments to high selling stores were not possible. Based on the analysis, the authors recommend that FoodCo start collaborating with their channel partners. First, FoodCo could communicate the value of collaboration to its channel partners in order to gain their support. Then, FoodCo and the retailers can share their demand plan with each other, foster collaboration and elevate the manufacturer-retailer relationships to a strategic level. Further, FoodCo could build scale by consolidating volumes through a single re-distributor for channels where the sales volumes are very low.by Sachin Khandekar and Aleksandra Titova.M.Eng.in Logistic

The Marketing Firm: Retailer and consumer contingencies

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Marketing Performance Measurement in FMCG Share of Wallet in Italian Retail Industry

Recent years, the Marketing Science Institute considered marketing performance measurement (MPM) a priority in marketing research and managerial practice. Several contributions on the same topic have been proposed in literature. The ability to measure the marketing performance is considered, a cognitive gap that determined a decrease of marketing relevance within firm and organizations. On the basis of relevant literature on retailing and an explorative case study, it will be proposed a conceptual and pragmatic model to investigate MPM for a consumer goods retailer. The model is aimed to identify antecedents of “share of purchase”, “share of wallet” and “share of visit”. An early test of the model has been carried out on two Italian leading chains: Superò, a master franchisee of SMA Spa (owned of 27 small supermarkets under control of the French Auchan Group) and Decò-Multicedi (the Group is a multi-channel company based on network of 5 Ad Hoc cash & carry centers, 253 Decò outlets and 3 Ayoka pet shops) located in Campania Region

Segmentation strategies for managing retail supply chains

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; and, (S.M.)--Massachusetts Institute of Technology, Engineering Systems Division; in conjunction with the Leaders for Global Operations Program at MIT, 2011.Cataloged from PDF version of thesis.Includes bibliographical references (p. 100-101).High-technology manufacturing companies often face rapid price decline and capacity constraints. Especially in the retail side of the business where the supply chain is much longer and revenue is sometimes not recognized until the sell-through point, optimizing inventory positioning is critical. No longer is a one-size-fits-all approach sufficient; in order to perform optimally, manufacturers should categorize their retailers, stores, and products, and tailor their strategy for each accordingly. This work shows how to use metrics such as gross margin return on inventory investment, models and tools such as assortment, promotional risk, supply chain, and replenishment segmentation to drive improvements in inventory performance and recommends ways to apply them in different retail chains. In particular, three retailer types - discount retailers, specialty retailers, and convenience retailers are discussed.by Catherine G. Liang.S.M.M.B.A

Shelf Management and Space Elasticity

Shelf management is a difficult task in which rules of thumb rather than good theory and hard evidence tend to guide practice. Through a series of field experiments, we measured the effectiveness of two shelf management techniques: “space-to-movement,” where we customized shelf sets based on store-specific movement patterns; and “product reorganization” where we manipulated product placement to facilitate cross-category merchandising or ease of shopping. We found modest gains (4%) in sales and profits from increased customization of shelf sets and 5–6% changes due to shelf reorganization. Using the field experiment data, we modeled the impact of shelf positioning and facing allocations on sales of individual items. We found that location had a large impact on sales, whereas changes in the number of facings allocated to a brand had much less impact as long as a minimum threshold (to avoid out-of-stocks) was maintained

Rapid replenishment at a consumer product goods manufacturer

Thesis (M. Eng. in Logistics)--Massachusetts Institute of Technology, Engineering Systems Division, 2007.Includes bibliographical references (p. 74-75).Increasing supply chain velocity has adverse consequences for consumer product goods manufacturers, but creates value and flexibility for retail stores. This thesis outlines a case study of a rapid replenishment pilot project between the food manufacturer General Mills, Inc. and their retail customer Giant Eagle. We outline constraints that General Mills had to impose upon their customer so it could remain profitable and retain its efficient operating strategy. We offer recommendations to General Mills on how to grow and sustain their rapid replenishment business.by Deborah Eugenia Becker and Roman Viktorovich Korchagin.M.Eng.in Logistic

COVID-19 and the Retail sector: A case study in Portugal

The pandemic affected the retail industry and so a new rapid and effective response was required. This article aims to discuss the impacts and measures adopted by companies under the influence of COVID 19 in retail, especially in the light of economic, social, and health perspectives. To do so, we carried out a systematic literature review where the state-of-the-art is discussed and a holistic perspective of the phenomenon is given. To corroborate the results, we conducted empirical research through a qualitative and exploratory case study of a logistics operator to better describe the effects of the pandemic on daily work. Finally, a paper with a multi-method approach was carried to understand and describe the effects of COVID-19 on the retail sector as well as propose measures to mitigate the impacts of the disease through a digital transformation strategy. The combined results revealed that, in the face of unexpected demand for some goods, there was the implementation of protection and hygiene measures in stores for employees and customers as well as an adjustment of distribution channels. The physical distance has exacerbated the digital transformation phenomenon in the retail industry by introducing technological innovations. The Digital Age has proven to be a crucial ally for retailers in this fight against the pandemic, however, there are still some factors to take into account in this transformation. This paper aims to arm retailers for future scenarios and highlights the adherence to a digital strategy as it will be a decisive factor for business survival

Hybrid jobs in the retail industry. Redesigning organizations, processes and work

Retail industry is changing, as a consequence of online competition, customers' behavior and technological advancements, and retail jobs are transforming as well, with a change of the skills required. The purpose of this thesis is to investigate how these jobs are changing and how they will likely become in some years

Value creation in category management relationships in the UK grocery market

This thesis explores the nature of value, and value co-creation within the context of collaborative category management relationships in the UK grocery sector. Category management is the process which involves a collaboration between food manufacturers (suppliers) and retailers to manage the needs of shoppers. Research into category management is very timely as the retailing industry is currently facing one of its greatest challenges. Shoppers are becoming more demanding and expect better value from their purchases. The research reveals that shoppers are switching from branded to private label products following on from the recent success of Discounters. This has created opportunities for all category suppliers including private label and smaller niche suppliers, if they produce retailer specific innovative and creative ideas. It was also found that the role of the category captain was abandoned five years ago, despite being the focus of the category management literature even today. The role now known as ‘preferred supplier’ is available to any category supplier and is no longer the exclusive right of the largest branded supplier. The current research study has involved UK based food industry supplier category managers and retail buyers, to understand if category management collaborations created value. Following a phenomenological approach using long qualitative interviews, the findings were controversial in that both the suppliers and retailers were not completely satisfied with the category management relationship, and that value was not always created. This finding contradicts existing research, and indeed the rhetoric that normally purveysin practice. The researcher anticipatesthat the thesis will alert practitioners to the underlying issues that exist and encourage them to find ways of working closer together, without fear of displeasing the other partner. It will no doubt spark reformist debates between suppliers and retailers, as well as update the category management literature. The research findings move the category management conversation forward from an objective to a subjective explanation of value creation. Finally, it introduces the importance of Service-Dominant Logic S-DL in creating value through the lens of the five axioms of S-DL. It also adds further insight from a supplier’s perspective based on confidential testaments of practitioners on the front-line