Retail supply chain service levels: the role of inventory storage

2016 ◽  
Vol 29 (6) ◽  
pp. 887-902 ◽  
Author(s):  
Asif Salam ◽  
Farhad Panahifar ◽  
P.J. Byrne
Keyword(s):  
Supply Chain ◽  
Customer Service ◽  
Service Level ◽  
Retail Industry ◽  
Inventory Level ◽  
Content Type ◽  
Service Levels ◽  
Product Availability ◽  
Customer Service Level ◽  
The Relationship

Purpose In today’s competitive retail industry the most critical success factor is customer service which is indicated by product availability. It is argued that in the retail industry, product availability is an important measure of quality. The single most vital decision that every retailer needs to make is, how to maximize service level while keeping minimum inventory level. The purpose of this paper is to explain and demonstrate the relationship between inventory level and customer service level. Design/methodology/approach This study examines an inventory system utilizing a simulation model based on company data obtained from a retail fast-moving-consumer goods chain operating in Thailand. Findings The results suggest that the achievement of a responsive service level is dependent on managing an efficient supply chain in addition to logistics cost reductions. The findings also reveal the effect the inventory level has on the service level. From the findings of this study, demand variability and service level have been found to have the most significant influence on the inventory level. From the findings, it can also be shown that real and accurate information is very important for service supply chains. Practical implications The paper promotes the importance of having an appropriate inventory management policy for a retail chain which should be driven by retail companies in order to better balance inventory and service levels. Originality/value The relationship between the inventory level and customer service level lead to different outcomes at different combinations of inventory and service levels. Significant relationships were found between inventory and service levels.

Comparative multi criteria analysis and dependent optimisation through integrated supply chain

2014 ◽  
Vol 63 (8) ◽  
pp. 1046-1069 ◽  
Author(s):  
Sanjay Sharma ◽  
Akshat Sisodia
Keyword(s):  
Supply Chain ◽  
Lead Time ◽  
Service Level ◽  
Inventory Level ◽  
Inventory Policies ◽  
Inventory Cost ◽  
Content Type ◽  
Customer Service Level ◽  
Integrated Supply Chain ◽  
Different Levels

Purpose – The purpose of this paper is to compare various inventory policies and their effect on various performance metrics at different levels of a multi stage supply chain. Later the model is integrated to include optimization of entire supply chain through implementation of collaborative supply chain model. Design/methodology/approach – Alternative inventory policies have been developed at different echelons and a comparison reflecting the usability on various factors such as inventory level, inventory cost and service level is presented so as to support the decision-making process. Various inventory policies such as economic order quantity, periodic ordering (T, M) and stock to demand have been considered. Along with the basic assumptions; lead time, demand variability, variability in demand during lead time, stock out costs have also been included to make the model more applicable to practical situations. Findings – After the selection of most appropriate inventory policy at each level through a decision matrix, the total cost of operating such a supply chain is calculated along with other parameters such as service level and inventory turns. The approach is of aggregating the optimized value at each echelon referred to as aggregated supply chain in the paper. Then the concept of integrated supply chain is introduced which optimizes the supply chain as a whole, rather than aggregating local optima. The comparison is made between the two approaches that prove the integrated supply chain's superiority. Furthermore, dependent optimization is run as it is not practically possible for each echelon to optimize at the same time. Originality/value – Each echelon is allowed to optimize at a time and other echelons assume corresponding values. This final comparative multi criterion analysis is based on the three factors, i.e. inventory cost, customer service level and inventory turnover with different weights assigned to each factor at different levels of a supply chain. Finally a consolidation of results is made to reflect the overall preference which proves that an integrated supply chain best serves all the parameters combined together.

Investigating the value of reducing errors in inventory information from a supply chain perspective

Kybernetes ◽  
2015 ◽  
Vol 44 (2) ◽  
pp. 176-185 ◽  
Author(s):  
Kazim Sari
Keyword(s):  
Supply Chain ◽  
Customer Service ◽  
Lead Time ◽  
Service Level ◽  
Supply Chain Collaboration ◽  
Content Type ◽  
Useful Knowledge ◽  
Lead Time Reduction ◽  
Customer Service Level ◽  
Time Reduction

Purpose – The purpose of this paper is to investigate the value of reducing errors in inventory information from a supply chain perspective. To this end, the benefits of reducing errors in inventory information are compared with those of lead time reduction and supply chain collaboration. Design/methodology/approach – A simulation model is constructed to perform the analysis. Findings – Results show that lead time reduction is the most important strategy for a supply chain in reducing total supply chain cost. In terms of customer service level, on the other hand, strategy of reducing errors in inventory information is observed as the most considerable strategy. However, the results for supply chain collaboration are somewhat unexpected. Namely, in spite of its popularity, supply chain collaboration provides very limited contribution to the supply chain. Practical implications – This research provides useful knowledge for the managers of a business enterprise in prioritizing various supply chain strategies. Originality/value – In supply chain management literature, greater emphasis is given to lead time reduction and supply chain collaboration than dealing with errors in inventory information. This research makes it clear that errors in inventory information should not be underestimated.

What should be lean buffer threshold for the forward-reserve warehouse?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Bhavin Shah
Keyword(s):  
Mathematical Model ◽  
Customer Service ◽  
Value Added ◽  
Service Level ◽  
Buffer Size ◽  
Value Stream Mapping ◽  
Content Type ◽  
Customer Service Level ◽  
The Impact ◽  
Just Right

PurposeThe assorted piece-wise retail orders in a cosmetics warehouse are fulfilled through a separate fast-picking area called Forward Buffer (FB). This study determines “just-right” size of FB to ensure desired Customer Service Level (CSL) at least storage wastages. It also investigates the impact of FB capacity and demand variations on FB leanness.Design/methodology/approachA Value Stream Mapping (VSM) tool is applied to analyse the warehouse activities and mathematical model is implemented in MATLAB to quantify the leanness at desired CSL. A comprehensive framework is developed to determine lean FB buffer size for a Retail Distribution Centre (RDC) of a cosmetics industry.FindingsThe CSL increases monotonically; however, the results concerning spent efforts towards CSL improvement gets diminished with raised demand variances. The desired CSL can be achieved at least FB capacity and fewer Storage Waste (SW) as it shifts towards more lean system regime. It is not possible to improve Value Added (VA) time beyond certain constraints and therefore, it is recommended to reduce Non-Value Added (NVA) order processing activities to improve leanness.Research limitations/implicationsThis study determines “just-right” capacity and investigates the impact of buffer and demand variations on leanness. It helps managers to analyse warehouse processes and design customized distribution policies in food, beverage and retail grocery warehouse.Practical implicationsProposed buffering model offers customized strategies beyond pre-set CSL by varying it dynamically to reduce wastages. The mathematical model deriving lean sizing and mitigation guidelines are constructive development for managers.Originality/valueThis research provides an inventive approach of VSM model and Mathematical algorithm endorsing lean thinking to design effective buffering policies in a forward warehouse.

scholarly journals A literature review on multi-echelon inventory management: the case of pharmaceutical supply chain

2018 ◽  
Vol 200 ◽  
pp. 00013 ◽  
Author(s):  
Nouçaiba Sbai ◽  
Abdelaziz Berrado
Keyword(s):  
Supply Chain ◽  
Customer Service ◽  
Inventory Management ◽  
Raw Materials ◽  
Integrated Approach ◽  
Service Level ◽  
Pharmaceutical Products ◽  
Management Problem ◽  
Pharmaceutical Supply Chain ◽  
Customer Service Level

Inventory management remains a key challenge in supply chain management. Many companies recognize the benefits of a good inventory management system. An effective inventory management helps reaching a high customer service level while dealing with demand variability. In a complex supply chain network where inventories are found across the entire system as raw materials or finished products, the need for an integrated approach for managing inventory had become crucial. Modelling the system as a multi-echelon inventory system allows to consider all the factors related to inventory optimization. On the other hand, the high criticality of the pharmaceutical products makes the need for a sophisticated supply chain inventory management essential. The implementation of the multi-echelon inventory management in such supply chains helps keeping the stock of pharmaceutical products available at the different installations. This paper provides an insight into the multi-echelon inventory management problem, especially in the pharmaceutical supply chain. A classification of several multi-echelon inventory systems according to a set of criteria is provided. A synthesis of multiple multi-echelon pharmaceutical supply chain problems is elaborated.

Exploratory analysis on the relationship between strategy and structure/processes in supply chains

2015 ◽  
Vol 26 (2) ◽  
pp. 381-400 ◽  
Author(s):  
Mikihisa Nakano
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Customer Service ◽  
Operating Cost ◽  
Exploratory Analysis ◽  
Process Variables ◽  
Content Type ◽  
Strategy And Structure ◽  
High Level ◽  
The Relationship

Purpose – The purpose of this paper is to provide some empirical evidence of the relationship between strategy and structure/processes in supply chains on the basis of the results of an exploratory analysis using survey data from Japanese manufacturers. Design/methodology/approach – This study explores the differences of structure/processes among the four supply chain strategies, that is, efficient, responsive, efficient/responsive, and traditional. Specifically, this study conducts a one-way analysis of variance of the structure/process variables by supply chain strategies. Findings – As the results of exploratory analysis including follow-up interviews with survey respondents, this study found many differences between traditional and efficient/responsive firms on process variables. With regard to structure variables, the existence of a supply chain management department, which is a variable of internal structure, in responsive and efficient/responsive firms is statistically more likely than in efficient firms. In addition, this study found significant differences between efficient and responsive firms, and traditional firms on some variables of external structure. Research limitations/implications – The results of this study explain why efficient/responsive firms can achieve high level of customer service and low operating cost, which is demonstrated by Qi et al. (2009). In addition, this study statistically ensures the validity of Stavrulaki and Davis’s (2010) proposition that firms with agile strategy tend to conduct opportunistic collaboration or have collaborative barriers with their suppliers because of their flexible supply base. Originality/value – This is the first empirical study that explores the relationship among management elements in supply chains including not only strategy but also structure and processes. Through this study, it is implied that the strategy-structure-processes-performance paradigm adopted in this study is useful for exploring the patterns of other management elements that fit in with supply chain strategies.

scholarly journals A framework for designing backroom areas in grocery stores

2017 ◽  
Vol 45 (3) ◽  
pp. 230-252 ◽  
Author(s):  
Maria Pires ◽  
Joaquim Pratas ◽  
Jorge Liz ◽  
Pedro Amorim
Keyword(s):  
Customer Service ◽  
Methodological Approach ◽  
Service Level ◽  
Grocery Stores ◽  
Content Type ◽  
Customer Service Level ◽  
Storage Area ◽  
Research Stream ◽  
Retail Grocery

Purpose The design of retail backroom storage areas has great impact on in-store operations, customer service level and on store life-cycle costs. Moreover, backroom storage in modern retail grocery stores is critical to several functions, such as acting as a buffer against strong demand lifts yielded by an ever-increasing promotional activity, stocking seasonal peak demand and accommodating e-commerce activities. The purpose of this paper is to propose a framework to design retail backroom storage area. Furthermore, the authors aim to draw attention to the lack of literature on this topic, while clarifying the relationship between this promising research stream and the considerable body of research regarding the design and operations of conventional warehouses, as well as retail in-store operations. Design/methodology/approach The key literature on backrooms, grocery retail, in-store operations, warehouse design and operations was reviewed. This allowed an understanding of the gap in the literature regarding the design of backrooms. Moreover, a case study methodological approach was conducted in a Portuguese retailer to extend the literature review. Findings Despite having functions similar to conventional warehouses, backroom storage facilities have particularities that deserve a distinct analysis. Thus, the authors stress these differences and demonstrate how they influence the development of a novel backroom design framework. Originality/value This paper fills a gap by proposing a framework to design backroom areas. Furthermore, this research may help practitioners to better design backroom areas, since this process currently lacks a formal and standardized procedure.

scholarly journals Adaptive inventory control system for material items with continuous non-stationary demand

2014 ◽  
Vol 5 (1) ◽  
pp. 11-20 ◽  
Author(s):  
Martin Krajčovič ◽  
Dariusz Plinta
Keyword(s):  
Control System ◽  
Inventory Control ◽  
Customer Service ◽  
Service Level ◽  
Inventory Systems ◽  
Inventory Level ◽  
Inventory Analysis ◽  
Software Module ◽  
Large Numbers ◽  
Customer Service Level

Abstract This paper describes an algorithm of dynamic inventory control system for large numbers of material items with continuous non-stationary demand. It uses principles of pull inventory control systems, statistical inventory analysis and joint replenishment inventory systems. This algorithm was processed in software module (VBA for Excel) and applied in practice. The target of described algorithm is to keep an optimum inventory level and optimum customer service level in terms of inventory control of items with non-stationary demand.

Supply chain management and market responsiveness: a simulation study

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdulqadir Rahomee Ahmed Aljanabi ◽  
Karzan Mahdi Ghafour
Keyword(s):  
Supply Chain ◽  
Lead Time ◽  
Supply And Demand ◽  
Service Level ◽  
Distribution Centers ◽  
Safety Stock ◽  
Content Type ◽  
Product Availability ◽  
Market Responsiveness ◽  
Number Of Customers

Purpose This study aims to provide a practical solution to the relationship between supply chain (SC) integration and market responsiveness (MR). A method is proposed to integrate SC and MR parameters, namely, product supply and demand in the context of low-value commodities (e.g. cement). Design/methodology/approach Simulation and forecasting approaches are adopted to develop a potential procedure for addressing demand during lead time. To establish inventory measurements (safety stock and reorder level) and increase MR and the satisfaction of customer’s needs, this study considers a downstream SC including manufacturers, depots and central distribution centers that satisfies an unbounded number of customers, which, in turn, transport the cement from the industrialist. Findings The demand during lead time is shown to follow a gamma distribution, a rare probability distribution that has not been considered in previous studies. Moreover, inventory measurements, such as the safety stock, depending on the safety factor under a certain service level (SL), which enables the SC to handle different responsiveness levels in accordance with customer requests. In addition, the quantities of the safety stock and reorder point represent an optimal value at each position to avoid over- or understocking. The role of SC characteristics in MR has largely been ignored in existing research. Originality/value This study applies SC flexibility analyzes to overcome the obstacles of analytical methods, especially when the production process involves probabilistic variables such as product availability and demand. The use of an efficient method for analyzing the forecasting results is an unprecedented idea that is proven efficacious in investigating non-dominated solutions. This approach provides near-optimal solutions to the trade-off between different levels of demand and the SC responsiveness (SLs) with minimal experimentation times.

scholarly journals Risk Management in Supply Chain Management: Case Study of a Brazilian Automotive Distribution Process

2015 ◽  
Vol 7 (5) ◽  
pp. 109 ◽  
Author(s):  
Diego A Wolfs ◽  
Franco Takakura ◽  
Maysa Rezende ◽  
Mauro Vivaldini ◽  
Pedro Domingos Antoniolli
Keyword(s):  
Supply Chain ◽  
Supply Chain Management ◽  
Customer Service ◽  
Product Distribution ◽  
Service Level ◽  
Added Value ◽  
Chain Management ◽  
Customer Service Level ◽  
Distribution Process ◽  
Management Case Study

<p>Globalisation requires from companies greater flexibility and adaptability of its internal processes, to allow them be aligned to market requirements. This flexibility results in new forms of relationships between partners, supply chains. For these chains differentiate themselves from their competitors, they should add value to products and services that they deliver to the end customer, while being profitable from the standpoint of its processes and operations. In this sense, would be needed effective supply chain management, which is constituted by collaboration and cooperation among partners, strategic and processes integration, to result in a profitable operation, and products and services with added value to the customer. Additionally, because logistics is a key element for the integration and collaboration among SC members, and due the fact that, depending of the scope of these chains, there are potentially more risks happening, which may have negative impacts on the customer service level, and consequently, loss of effectiveness of their logistics processes. This study aims to analyze the risks in a product distribution process in the Brazilian automotive sector, considering the operations performed by a logistics operator of this automaker.</p><strong>Keywords: </strong>Automotive Industry; Logistics Operator; Supply Chain; Supply Chain Management; Risks Management.

scholarly journals An Agent-Based Model Driven Decision Support System for Reactive Aggregate Production Scheduling in the Green Coffee Supply Chain

2019 ◽  
Vol 9 (22) ◽  
pp. 4903
Author(s):  
María Pérez-Salazar ◽  
Alberto Aguilar-Lasserre ◽  
Miguel Cedillo-Campos ◽  
Rubén Posada-Gómez ◽  
Marco del Moral-Argumedo ◽  
...  
Keyword(s):  
Supply Chain ◽  
Decision Support ◽  
Customer Service ◽  
Service Level ◽  
Production Plan ◽  
Agent Based ◽  
Model Driven ◽  
Demand Pattern ◽  
Customer Service Level ◽  
Demand Patterns

The aim of this paper is to contribute to the thread of research regarding the need for logistic systems for planning and scheduling/rescheduling within the agro-industry. To this end, an agent-based model driven decision support system for the agri-food supply chain is presented. Inputs in this research are taken from a case example of a Mexican green coffee supply chain. In this context, the decision support agent serves the purposes of deriving useful knowledge to accomplish (i) the decision regarding the estimation of Cherry coffee yield obtained at the coffee plantation, and the Parchment coffee sample verification decision, using fuzzy logic involving an inference engine with IF-THEN type rules; (ii) the production plan establishment decision, using a decision-making rule approach based upon the coupling of IF-THEN fuzzy inference rules and equation-based representation by means of mixed integer programming with the aim to maximize customer service level; and (iii) the production plan update decision using mathematical equations once the customer service level falls below the expected level. Three scenarios of demand patterns were considered to conduct the experiments: increasing, unimodal and decreasing. We found that the input inventory and output inventory vary similar over time for the unimodal demand pattern, not the case for both the increasing and decreasing demand patterns. For the decreasing demand pattern, ten tardy orders for the initial production schedule, an 88% service level, and nineteen tardy orders from the estimated production results, a 77% service level. This value falls below the expected level. Consequently, the updated aggregate production schedule resulted in ten tardy orders and an 88% service level.

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