Article

Execution: The Missing Link in Retail Operation

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Abstract

In spite of making substantial investments in information technology planning systems, retailers are struggling with two execution problems—" inventory record inaccuracy" and "misplaced stock keeping units (SKUs)"—that are hurting their performance and ability to satisfy customers. At one leading retailer, sixty-five percent of their inventory records were inaccurate (i.e., recorded inventory levels did not reflect actual inventory levels). Misplaced SKUs, at another leading retailer, prevented one in six customers who requested help from a sales associate from finding the products that were available in a store. These execution problems reduce profits by more than 10%. Moreover, performance along these two dimensions of execution varies substantially among stores within the same chain that use identical information technology. By examining the systematic differences that exist among stores, this article identifies the drivers of inventory record inaccuracy and misplaced SKUs and recommends steps retailers can take to improve operational execution in their chains.

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... Consider the problem of tracking the inventory level of a single product (SKU) at a brick and mortar shop. Among the slew of complex operational processes that a retailer performs, this one would appear to be relatively simple, so it is perhaps surprising that in fact inaccurate records of inventory occur frequently: past audits of major retail chains have found errors in over 65% of records across all SKU-store pairs [1,2]. The most significant consequences of these inaccuracies are events referred to as phantom inventory, which alone cost the retail industry up to 4% in annual revenue. ...
... TPR ≤ TPR * − Ω 1 √ n . 1 Sub-exponential, more generally. ...
... The majority of these studies has focused on a formulation called robust principal component analysis (PCA) [9,10], and in particular, approaches based on convex relaxations. Most relevant to our problem (which allows for noise) is the stable PCP [3], written in Eq. (1). Despite a sequence of breakthroughs and improvements in algorithms for optimizing these convex objectives (initial work by [11,12,13]; see [14,15] for surveys of more recent work), progress in statistical guarantees for these formulations has been relatively slower since the initial results of [9,3]. ...
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We observe that a crucial inventory management problem ('phantom inventory'), that by some measures costs retailers approximately 4% in annual sales can be viewed as a problem of identifying anomalies in a (low-rank) Poisson matrix. State of the art approaches to anomaly detection in low-rank matrices apparently fall short. Specifically, from a theoretical perspective, recovery guarantees for these approaches require that non-anomalous entries be observed with vanishingly small noise (which is not the case in our problem, and indeed in many applications). So motivated, we propose a conceptually simple entry-wise approach to anomaly detection in low-rank Poisson matrices. Our approach accommodates a general class of probabilistic anomaly models. We extend recent work on entry-wise error guarantees for matrix completion, establishing such guarantees for sub-exponential matrices, where in addition to missing entries, a fraction of entries are corrupted by (an also unknown) anomaly model. We show that for any given budget on the false positive rate (FPR), our approach achieves a true positive rate (TPR) that approaches the TPR of an (unachievable) optimal algorithm at a min-max optimal rate. Using data from a massive consumer goods retailer, we show that our approach provides significant improvements over incumbent approaches to anomaly detection.
... Given that most retail backrooms are 15-20% of a retailer's store area [9] and are often home to many SKUs, there is a significant propensity for losing or misplacing products. Replenishing stock from backrooms can lead to putting all the items in the backroom, as opposed to stocking some on shelves, forgetting to replenish the sales floor, or failing to do so in a timely fashion [10]. It is important to note that most backrooms do not have assigned locations for items, and generally suffer from a lack of automation, often due to budget constraints [9]. ...
... Misplaced products in the backroom can result in incorrect shelf stocking, contributing to IRI or "phantom stockouts" (an issue that we discuss in a later section). For instance, after a case of products arrives at a store from the distributor, the products can be misplaced or lost [10], given the size and often unorganized nature of backrooms. If an employee later records or updates the inventory in the system and fails to record the misplaced items, IRI will occur and, as a result, the shelves may not be replenished appropriately. ...
... Corsten and Gruen [4], and Raman [10] point out that many inventory systems do not delineate between backroom location stock and shelf stock, meaning the inventory in backrooms is not well tracked, thus making them more susceptible to IRI. Few employees have time to count backroom inventory and compare on-hand inventory to system inventory, as backrooms are not prioritized when customers require attention on the sales floor. ...
Article
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This paper explores the impact of retail store backrooms on inventory record inaccuracies (IRI) and waste. A trend in the retail industry is operating in the absence of a backroom. Benefits of operating without a backroom can include more employee presence on the sales floor, quicker replenishment (or the elimination of traditional backroom to shelf replenishment entirely), lower on-hand inventory, and the reduction of waste in the form of time, labor, cashflow, and product obsolescence. By conducting a literature review of the published literature on retail backrooms, this paper explores two additional unstated benefits to retailers operating without a backroom; specifically, the reduction of IRI and waste—an angle that has been previously understudied in the current academic literature. The objectives of this paper include defining a link between the existence of a backroom and waste/IRI, presenting an opportunity for future research in this area of study, and providing practical advice for corporations that wish to operate with or without a backroom.
... • Inventory data are known to often be inaccurate [34][35][36]. Ref. [37] found that in their study, 65% of inventory records were inaccurate. Inventory data inaccuracy for fruits and vegetables occurs due to product code entry errors during weighing by customers at the display area or at the checkouts by employees. ...
... There are some limitations to our study. First, data could be partially inaccurate due to recording errors at retailers [34,35], which we try to correct using inventory correction data at the store level and by eliminating obvious data errors. Second, there is no recorded data for inventory age, which is the main driver for spoilage in the fruit and vegetable category. ...
Article
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Spoilage reduction in fresh product supply chains is an important challenge and represents great opportunities for cost savings and reduced environmental and social footprints. The purpose of this paper is to identify the drivers of spoilage and to discuss how these insights can be used to reduce spoilage.We use panel data techniques to quantify the drivers of spoilage in the days-fresh category using daily spoilage and supply chain data (457,539 store-SKU level observations) for fresh fruits and vegetables at Switzerland’s largest retailer. We quantify to what extent inventory, promotions, delivery type, commitment changes, order variations, order cycle, and quality issues influence spoilage. We discuss the mechanisms through which inventory age and product standards impact spoilage of days-fresh products. Our novel findings underline the necessity for specialized supply chain processes, tracking inventory age and damage, and collaboration with supply chain partners in the management of this fundamental product category.
... The retail workforce is a key to resolving execution issues (Raman et al., 2001), such as inventory record inaccuracy (DeHoratius and Raman, 2007), and phantom stockouts at retailers (Ton and Raman, 2010). Phantom stockouts occur when a product is available in the store but not on the right shelf (Fisher and Raman, 2010). ...
... Decreasing store labor is associated with a higher percentage of phantom products. A one-standard-deviation increase in the percentage of phantom products is associated with a 1% decrease in-store sales, which translates to a loss of roughly 7% of the net income (assuming a 30% gross margin) generated by an average store (Raman et al., 2001). Despite substantial changes in retailing (e.g., methods and time of delivery, store locations, shopping habits and product offerings) (Grewal and Levy, 2007), store associates continue to be the critical "sales messengers" mostly responsible for retailers' success. ...
Article
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Retail workforce optimization keeps store employees happy, improves customer service, and reduces opportunity costs of lost sales. As workforce compensation costs constitute one of the largest components of retailers' operating costs, there is a widespread tendency to understaff to save on those costs. In the case of workforce undersizing, when a retailer decides to increase the size of the workforce, the additional workforce not only generates incremental revenue with better sales conversion but also has a positive impact on workforce morale, as the workforce is not overstretched. It also results in higher retention of the retail workforce. Improved retail workforce retention leads to lower hiring and training costs and improved store performance. On the other hand, retail workforce oversizing results in higher payroll costs and decreased engagement of retail employees. Hence, there is a need to find the right number of store employees to provide consistent customer service even during the period of volatile store traffic and still manage compensation costs favorably. The research provides various frameworks to investigate whether retail stores are properly sized and studies the impact of optimal workforce sizing on retail workforce compensation costs and ultimately on store performance.
... Analysis-focused literature is either empirical in nature, or it does not present a specific model nor its optimization. Empirical research focusing on inaccuracy can be found in [20,31] and [22], while [10] present a simulation study and share results and insights. One article found that inaccuracy amounted to 10% of profits over a certain period for a select case [22]. ...
... Empirical research focusing on inaccuracy can be found in [20,31] and [22], while [10] present a simulation study and share results and insights. One article found that inaccuracy amounted to 10% of profits over a certain period for a select case [22]. ...
Article
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Many hospital supply chains in the US follow a “stockless” structure, often implemented with the acquisition of new systems promising improved efficiencies and responsiveness. Despite vendor promises, supply chain gains from new technology are often unfulfilled or result in a reduction of performance. A critical component of achieving promised gains is the hospital’s ability to accurately and consistently capture hospital inventory use. In practice, recording demand with perfect, 100% accuracy is infeasible, so our models condition on the level of accuracy in a particular hospital department, or point-of-use (POU) inventory location. Similar to previous literature, we consider actual net inventory and recorded net inventory in developing the system performance measures. We develop two models, optimizing either cost or service level, and we assume a periodic-review, base-stock (or par-level) inventory policy with full backordering. In addition to choosing the optimal order-up-to level, we seek the optimal frequency of inventory counts to reconcile inaccurate records. Results from both models provide insights for supply chain managers in the hospital setting, as well as hospital administrators considering the adoption of similar technologies or systems.
... Phantom stockouts occur when a product is available in the store but not on the right shelf (Fisher& Raman, 2010). A one-standard-deviation increase in the percentage of phantom products is associated with a 1% decrease in-store sales which, translates to a loss of roughly 7% of the net income (assuming a 30% gross margin) generated by an average store (Raman et al., 2001). An increase in-store traffic would lead to more sales, as higher traffic provides more opportunities for sales conversion. ...
... Thus, sales are to be higher when products are shelved properly (Ton & Raman, 2010) and store associates are available to help customers in the purchase process (Fisher et al., 2006). The retail workforce is a key to resolving execution issues (Raman et al., 2001) such as inventory record inaccuracy (DeHoratius & Raman, 2007) and phantom stockouts at retailers (Ton & Raman, 2010). ...
Article
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The retail workforce is a strategic lever of the retailer for improving sales growth, market share, and profitability. With optimal retail workforce sizing and structure, customers would get prompt sales assistance and service, shelves should be replenished in a timely manner, store employees should be neither idle nor overstretched, and compensation costs should be managed effectively. Undersizing may hurt retailers in the long run as it affects merchandising capability and customer services, which ultimately hurt store sales and profits. Retail workforce optimization keeps store employees happy, improves customer service, and reduces opportunity costs of lost sales. The research provides various frameworks that outline the impact of undersizing in retail stores on sales and profitability and provides a methodology to determine the optimal workforce size. The research also provides an illustration with various scenarios to investigate whether a retail store is understaffed and calculates the financial impact of undersizing on revenue and profitability.
... Even though they can be found finally, they may not yield profit, because of the seasonal products or the food with limited expiry date. A study shows that the misplaced items reduce profit by 25% [3]. ...
Article
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In this paper we consider a two-echelon supply chain under price-dependent demand market and we use RFID to eliminate the effect of inventory inaccuracy. Models are built to evaluate the economic viability and coordination conditions. We analyze two scenarios in which the supply chain is defined, the integrated one and the decentralized one, respectively. For the integrated, we compare the different supply chain revenue with and without RFID technology and then determine the optimal inventory decisions. For the decentralized, we mainly focus on the coordination mechanism by revenue sharing contract under Stackelberg game. By seeking appropriate contract parameters, the supply chain can finally be coordinated while all partners are better off. Furthermore, numerical examples are given to verify our proposition.
... Often these demandable products having shorter shelf-life, and due to complex supply chain network, it is hard to consume the product by the end customer before the expiry date. SCNMPP becomes more complex in terms of inventory, transportation, and distribution due to a large number of perishable product varieties and lastly, the efficiency of SCNMPP model decreases [21][22][23]. Therefore, the forecasting of consumption of all perishable products becomes difficult and time-consuming [24]. ...
Article
In a supply chain environment, time delay has a significant impact on the success of perishable products. A major concern is therefore aimed at development of a holistic optimized approach in a supply chain environment for perishable products. Thus, integration of production, inventory and, distribution of perishable products in a supply chain environment are the challenging tasks for practitioners and researchers. In general, the standard optimal supply chain model cannot work for perishable products. There is therefore, a need for a holistic model that focuses on the consolidation of the processes. Shorter product shelf-life, temperature control, requirement of strict tractability, large number of product variants, and a large volume of goods handled are the major challenges in a supply chain environment for perishable products. The present work focuses on the development of a holistic model which uses improved bacteria forging algorithm (IBFA) for solving the formulated model. We have proposed and analyzed some general properties of the model and, finally applied it to a three-stage supply chain problem using an IBFA. Two case studies have been considered for support and demonstration of the integrated perishable supply chain network problem. Results obtained from IBFA reveal that the proposed model is more useful for decision makers while considering optimal supply chain network for perishable products. Finally, validation of results has been carried out using bacteria forging algorithm (BFA). The computational performance of the proposed algorithm proves that IBFA is instrumental in effectively handling the proposed approach.
... Salmon (1989) [1] argues that it is no more just merchandising, which is important for successful retailing, what is becoming more and more important nowadays is other aspects of store operations which include various other aspects including inventory management. Raman et, a. (2001) [2], in their study reported that the accuracy level of inventory available in the store is significantly poor and this was attributed to issues with inventory replenishment H. R., Ganesha [3] argues that because of various data related issues including inventory accuracy levels, many fail to implement the automated replenishment system and strongly recommend that different replenishment tools must be applied concerning real-time inventory issues. Kaizers et, al. (2003) [4] studied the relationship between store manager's decision on inventory planning and overall store profitability whereby they found that owing to complexities store managers fail to take appropriate decisions related to inventory management. ...
Article
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The concept of minimum display quantity (MDQ) is unavoidable in brick-and-mortar retailing format owing to which, retailers need to ensure a minimum level of inventory displayed at each store irrespective of the revenue or inventory turns generated by a particular store. It is observed that majority of bricks-and-mortar retailers in India assume; a) existing inventory management system is ideal to their store, b) software solutions record accurate inventory movement, c) involving store management team in inventory-related decision making is risky/biased and most importantly d) loss of sale due to stock-outs is inevitable. Such assumptions and widely followed practice have created a predisposition and mindset in-store managers and they believe that their store delivers revenue and profit to the best of its potential with the inventory which is made available to them through existing inventory management system and we cannot avoid the number of instances consumers are unsatisfied due to stockout situations. In this research, we have analysed the existing decision-making process and control systems related to inventory management of a select retailer, attempted to design a new framework, and applied the same through an experiment to evaluate the change in a) overall store profitability and b) inventory-related key performance indicators.
... Salmon (1989) [11] argues that it is no more just merchandising, which is important for successful retailing, what is becoming more and more important nowadays is other aspects of store operations which include various other aspects including inventory management. Raman et, a. (2001) [12], in their study reported that the accuracy level of inventory available in the store is significantly poor and this was attributed to issues with inventory replenishment systems and inventory planning methodology. Wanger (2002) [13] argues that because of various data related issues including inventory accuracy levels, many fail to implement the automated replenishment system and strongly recommend that different replenishment tools must be applied concerning real-time inventory issues. ...
Article
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In brick-and-mortar retailing format, retailers need to ensure the minimum level of inventory displayed at each store for each category irrespective of the revenue or profit generated by a particular category. It is observed that majority of bricks-and-mortar retailers in India assume; a) existing category mix is ideal for their stores, b) any modification in the existing category mix could possibly lead to loss of sale of an existing category, c) it is preferred to have categories generating higher average transaction values and most importantly d) categories with lower average selling price products and generating lower average transaction values negatively impact store's revenue. Such assumptions and widely followed practice have created a predisposition and mindset in-store managers and they believe that their store delivers revenue and profit to the best of its potential with the existing category mix. In this research, we have analysed the existing category mix of a select retailer, attempted to alter the existing category mix through an experiment and evaluate the change in a) category level profitability, and b) overall store profitability.
... Inventory mismatch refers to difference in information system inventory and physical inventory. Inaccurate incoming and outgoing deliveries are also responsible for inventory mismatch [17]. Hollinger and Davis (2001) [10] analyzed through survey method that theft, managerial faults and vendor scam costing to US retailers USD 33 billion in 2001 which was about 1.8 % of sales. ...
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Barcodes are commonly used tool for retail store operations in India. Through literature review and questionnaire method, various parameters are identified to further study the reasons of adopting bar-coding in place of RFID and EDI. Bar-coding is economical and easy to use without much training to the employees and costly technological infrastructure is also not required for the implementation. The results of statistical analysis prove that use of bar-coding in retail store operations offers better services at low cost. It helps in management of inventory in the retail outlet.
... Studies argue that it is no more just merchandising, which is important for successful retailing, what is becoming more and more important nowadays is other aspects of store operations which include various other aspects including inventory management [12]. the accuracy level of inventory available in the store is significantly poor and this was attributed to issues with inventory replenishment systems and inventory planning methodology [13]. Because of various data related issues including inventory accuracy levels, many fail to implement the automated replenishment system and strongly recommend that different replenishment tools must be applied with real-time inventory issues [14]. ...
Chapter
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The complex nature of brick-and-mortar lifestyle retailing both from supply-side and demand-side owing to a sheer vast number of unique designs, products, brands, and categories the retailer mandatorily need to offer in their stores as part of their product assortment, added with limitation in terms of opportunity available for the store to retain consumers for a longer period just because of increasing competition from both organized and unorganized lifestyle retailers, makes it furthermore important for any organized brick-and-mortar lifestyle retailer to be more careful and efficient in ensuring appropriate adaptation of emerging information communication and computation tools (ICCT). It is observed that a majority of lifestyle retailers in India believe that they have adopted the latest ICCT tools and solutions and are yielding accurate outputs that can be used for interpretation and decision-making. This belief/assumption always distracts them from evaluating the adaptation level of existing ICCT tools and solutions by their employees across levels in the hierarchy, rather they spend most of their time finding ICCT tools and solutions which are new in the market to be integrated with their existing systems. In these six months' long research work we have evaluated the existing adaptation level and understanding of ICCT of a select national level brick-and-mortar lifestyle retailer in India; identified key loopholes in ICCT adaptation; experimented to derive insights and inferences, and suggested appropriate adaptation methods for efficient usage of ICCT. Results have demonstrated that rather working on identifying new ICCT tools and solutions if the retailer just focuses on modifying the input methodologies of their existing ICCT tools and solution they would reduce overall expenses incurred by them in returning the inventory which is ordered using an ICCT by 74.31 percent and also save on their overall consumer communication expenses by 19.82 percent.
... Raman et al. [6] called the gap between strategy and actual results the missing link and named it execution. Reference [7] also adopted this expression, defining execution as the missing link between the goal and the result, and gave a note that this statement comes from Darwin's theory of biological evolution. ...
Article
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Over the years, experts have focused their research on ways to increase the executive capacity of university administrators. This is because only by improving the quality of execution of college and university administrative personnel can they actively execute various policies and measures, fully exploit their subjective initiative, and ensure the educational reform of colleges and universities. Increasing the executive capacity of administrative staff can help colleges and universities manage more effectively. Therefore, in the development process of higher education institutions, it is necessary to strengthen the execution of administrative staff, especially the need to adhere to the problem as the basic orientation. Take scientific and practical steps to strengthen administrative personnel’s executive ability in light of current issues with administrative management personnel’s executive power, and establish the groundwork for ensuring the quality of management work. Combining deep learning, this paper proposes a path to improve the executive power of college administrators based on deep learning. To begin, familiarize yourself with the deep noise reduction autoencoder model and support vector regression (SVR) theory and build the DDAE-SVR deep neural network (DNN) model. Then, input a small-scale feature index sample data set and a large-scale short-term traffic flow data set for experiments; then, assess the model’s parameters to achieve the optimal model. Finally, use performance indicators such as MSE and MAPE to compare with other shallow models to verify the effectiveness and advantages of the DDAE-SVR DNN model in the execution improvement path output of university administrators and large-scale data sets.
... Also, a study made by Raman et al. (2001) inaccurate inventory records has reduced profits by ten percent. Therefore, accuracy of the inventory records is vital for the performance of an inventory management system and necessary actions should be taken accordingly. ...
Chapter
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In today’s economy, efficient inventory management is vital for all companies. Business environment, which is considered as volatile, uncertain, complex, and ambiguous (VUCA), big savings can be achieved with efficient inventory management. Effective implementation and management of inventory management system is vital for a company’s success. The success of such implementation not only affects the profit but also customer satisfaction. The goal of this chapter is to summarize the challenges faced and propose a framework to overcome these challanges.
... Not only are e-tailers starting to open off-line stores but bricks-andmortar stores now provide online services and undertake order fulfilment-leading to a variety of new challenges and complexities in retail store operations. Furthermore, the execution quality of retail store operations significantly impacts the effectiveness of store plans and automation (Raman et al (2001)) and financial performance. There are three entities in retail store operations: customers, employees, and products. ...
Article
This work studies an employee scheduling problem considering risk aversion under uncertainty demand (i.e., customer traffic) in retailing. Stochastic employee scheduling comprises two stages, the here-and-now decision (i.e., first-stage), before the actual demand is known, is to allocate number of full-time employees to shifts by using some forecast or empirical data; the wait-and-see decision (i.e., second-stage) involving takes some recourse actions, such as recruit part-time employees and extend shift length of full-time employees (i.e, overtime shift), since the actual demand realization. In order to adapt different decision environments, especially facing decision makers with different risk preference, and guarantee scheduling resilience, the risk measure (e.g, conditional value-at-risk (CVaR)) is taken into consideration in the general two-stage stochastic programming framework. A sample average approximation algorithm is used to solve the risk-averse employee scheduling problem with uncertain demand.
... This issue is particularly important in supply chain and operations-related tasks, such as retail shelf audits. High-quality shelf-level inventory information can yield substantial benefits for companies by maximizing the effectiveness of retail operations and supplier performance, with subsequent impacts on customer experience and firm profits (Chuang et al. 2016, Raman et al. 2001. ...
Article
For the execution of many supply chain operations tasks, firms are increasingly engaging in crowdsourcing – the act of dynamically delegating work via digital channels to for‐hire individuals intermittently available in the marketplace (also called “the crowd”). The success of this practice hinges on the ability to efficiently attract workers that produces quality work from among the crowd. We draw on the foundations of Self‐determination Theory and the Heuristic‐Systematic Model to examine the ways that variations in messages presented to crowdsourced agents can serve as a mechanism to enhance participation and associated performance outcomes. Data from a field experiment involving a retail inventory audit task reveal that messages appealing to the crowd’s consumer identity, as opposed to crowdsourcing platform identification or firm identification, generally lead to superior performance outcomes, particularly shorter reservation time, higher task quality approval, and post‐task satisfaction. However, these effects are contingent on the valence of the message frame and the nature of the task. These findings shed light on elements critical to the successful utilization of this new type of crowdsourced “employment” in supply chain and operation tasks and suggests the careful crafting of crowdsourced task messages as a low‐cost way for managers to improve task performance outcomes.
... Despite the importance of the above, there is limited research that focuses on the role of multiple actors in a customer engagement and service ecosystem that analyses these relationships. Limited research exists on the role of frontline employees in the value co-creation process, especially in the retail sector, where management of people to create value is a challenging enterprise, especially as firms in this sector suffer from high employee turnover (Raman, DeHoratius, & Ton, 2001;Ton & Huckman, 2008). As employees, frontline staff and managers are ideal word-ofmouth ambassadors in most retail organisations, they are most likely to have a direct impact on customer engagement and relationships in a multi-actor system. ...
Article
Customer engagement in a value co-creation processes is an attractive proposition for firms as it closely mirrors consumer needs, encourages their participation in service consumption, improves their perception and reduces uncertainty and risk. This approach emphasizes the centrality of interaction among different actors within an ecosystem. Despite the critical role frontline employees play in customer engagement and relationship processes in a multi-actor system, there is a limited understanding of the role of co-workers and supervisors’ support in addition to organisational support for achieving high levels of employee and consequently customer engagement as well as reducing sales employees’ intention to quit. Using structural equation modelling and analyzing 481 employees’ data from an Italian retail chain, this paper analyses the impact of organisational and social support on employees’ job satisfaction, work engagement and intention to quit. Implications for theory and practice in value co-creation process in a multi-actor system are also discussed.
... Cannella, Framinan, Bruccoleri, Barbosa-Póvoa, and Relvas (2015) demonstrated in a simulation experiment how in collaborative supply chains even very small inventory inaccuracies may lead to significant unnecessary costs. Empirical evidence finally also suggests that IRI may cause profit losses that range between 3% and 10% (Raman et al., 2001;DeHoratius & Raman, 2008). ...
Article
Practical experience and scientific research show that there is scope for improving the performance of inventory control systems by taking into account the discrepancies between the actual physical inventory levels and those recorded in the information system (IS). Such discrepancies, which are often referred to as inventory (record) inaccuracies, are a major concern in contemporary supply chains where commitments to orders are usually made based on IS records only. Empirical data obtained in two case studies motivate the development of a multiperiod inventory control model that explicitly accounts for the differences between physical inventory levels and IS stock records. Numerical experiments help derive some key managerial insights. We find that previous important results on the behavior of the optimal order quantity in the retailing environment do not necessarily apply in an e‐retailing/Business‐To‐Business (B2B) context. We adjust and apply the zero balance walk technique to the e‐retailing/B2B case and deduce a simple and efficient learning mechanism about the errors’ distributions. We close with an agenda for further research in this area.
... The literature review is focused on the impact of RFID on supply chain performance in the context of inventory inaccuracy, as well as on the impact of inventory inaccuracy on the bullwhip effect. Direct impacts of inventory inaccuracy are either lost sales and revenue or unnecessary inventory and operating costs (Raman et al., 2001;Heese, 2007). DeHoratius and Raman (2008) investigated inventory record inaccuracy in the retail context and found that 65 per cent of 370,000 inventory records from 37 stores of one retailer were inaccurate. ...
Article
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Purpose Information distortion results in demand variance amplification in upstream supply chain members, known as the bullwhip effect, and inventory inaccuracy in the inventory records. As inventory inaccuracy contributes to the bullwhip effect, the purpose of this paper is to investigate the impact of inventory inaccuracy on the bullwhip effect in radio-frequency identification (RFID)-enabled supply chains and, in this context, to evaluate supply chain performance because of the RFID technology. Design/methodology/approach A simulation modeling method based on hierarchical timed colored petri nets is presented to model inventory management in multi-stage serial supply chains subject to inventory inaccuracy for various traditional and information sharing configurations in the presence and absence of RFID. Validation of the method is done by comparing results obtained for the bullwhip effect with published literature results. Findings The bullwhip effect is increased in RFID-enabled multi-stage serial supply chains subject to inventory inaccuracy. The information sharing supply chain is more sensitive to the impact of inventory inaccuracy. Research limitations/implications Information sharing involves collaboration in market demand and inventory inaccuracy, whereas RFID is implemented by all echelons. To obtain the full benefits of RFID adoption and collaboration, different collaboration strategies should be investigated. Originality/value Colored petri nets simulation modeling of the inventory management process is a novel approach to study supply chain dynamics. In the context of inventory errors, information on RFID impact on the dynamic behavior of multi-stage serial supply chains is provided.
... By sharing information through suppliers, customers and within organizations we can manage the inventory inaccuracy like damaged, out-of-date, seasonal and incorrect incoming and outgoing deliveries and finally misplaced items (Hollinger & Davis, 2001;Raman et al., 2001). Due to this supply chain performance will decrease, so, to overcome this information sharing has to happen transparently all over the organization. ...
Article
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This paper aims to understand the impact of big data analytics on the retail supply chain. For doing so, we set our context to select the best big data practices amongst the available alternatives based on retail supply chain performance. We have applied TODIM (an acronym in Portuguese for Interactive Multi-criteria Decision Making) for the selection of the best big data analytics tools among the identified nine practices (data science, neural networks, enterprise resource planning, cloud computing, machine learning, data mining, RFID, Blockchain and IoT and Business intelligence) based on seven supply chain performance criteria (supplier integration, customer integration, cost, capacity utilization, flexibility, demand management, and time and value). One of the intriguing understandings from this paper is that most of the retail firms are in a dilemma between customer loyalty and cost while implementing the big data practices in their organization. This study analyses the dominance of the big data practices at the retail supply chain level. This helps the newly emerging retail firms in evaluating the best big data practice based on the importance and dominance of supply chain performance measures.
... Also, a study made by Raman et al. (2001) inaccurate inventory records has reduced profits by ten percent. Therefore, accuracy of the inventory records is vital for the performance of an inventory management system and necessary actions should be taken accordingly. ...
Chapter
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Recommendation systems mainly produce a list of recommendations in any field, using one of two methods - via Collaborative Filtering or Content-Based Filtering (Jafarkarimi, Sim, & Saadatdoost, 2012). Collaborative filtering depends on the behaviour of the previous user, such as products that he or she previously purchased or previous assessments, in line with similar decisions made by other users, so that the first user’s wishes can be expected based on the decisions of other users (Melville & Sindhwani, 2010). Content-based filtering is based on bringing similar products with their characteristics to the purchased product (Mooney & Roy, 2000). These methods are often used simultaneously to form a single system called Hybrid Recommender Systems (Balabanović & Shoham, 1997).
... Inventory inaccuracy is prevalent in many industries and supply chains (Raman, DeHoratius, and Ton 2001;Dehoratius and Raman 2008). It is reported that the retailer suffers from inventory inaccuracy of 1.75% of $58 billion revenue and the supplier suffers 0.22-0.73% of the revenue (Alexander et al. 2002). ...
Article
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This paper focuses on pricing strategies, inventory policies for a supply chain when Radio Frequency Identification (RFID) technology is adopted to cope with inventory inaccuracy. The supply chain consists of one supplier and one retailer, in which the RFID tag price is shared between the supplier and the retailer. We present and compare the performance differences between a wholesale price contract and a consignment contract when the retailer is the Stackelberg leader and the supplier is the follower. Based on the optimal pricing and inventory decisions, an interesting observation of contract selection is that there are two critical values of inventory available rate such that when the inventory availability is less than the lower value, both the supplier and the retailer prefer a consignment contract; when the inventory availability is greater than the upper value, a wholesale price contract is their best choice; when the inventory availability is between the two values, the supplier prefers a wholesale price contract and the retailer prefers a consignment contract. Additionally, there exist threshold values of RFID tag price and sharing rate to determine the contract preference for the retailer. Furthermore, the profits of both the supplier and the retailer are independent of the RFID tag price sharing rate in a wholesale price contract, and the supplier has the incentive to invest in RFID tag cost in a consignment contract.
... Vehicle operator behaviors influence logistics performance and explain the gap between planned and actual distribution operations (e.g., routes, schedules). Thus, including the operators' knowledge into decision-making models and data-driven analytics will allow for synchronizing information technologies with human experience to achieve better delivery times, increase service level to customers, improve profit, etc. [50,51]. ...
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Purpose The findings of this paper throw light on the focal research areas within RFID in the supply chain, which serves as an effective guideline for future research in this area. This research, therefore, contributes to filling the gap by carrying out an SLR of contemporary research studies in the area of RFID applications in supply chains. To date, SLR augmented with BA has not been used to study the developments in RFID applications in supply chains. Design/methodology/approach We analyze 556 articles from years 2001 to date using Systematic Literature Review (SLR). Contemporary bibliometric analysis (BA) tools are utilized. First, an exploratory analysis is carried, out revealing influential authors, sources, regions, among other key aspects. Second, a co-citation work analysis is utilized to understand the conceptual structure of the literature, followed by a dynamic co-citation network to reveal the evolution of the field. This is followed by a multivariate analysis is performed on top-100 cited papers, and k-means clustering is carried out to find optimal groups and identify research themes. The influential themes are then pointed out using factor analysis. Findings An exploratory analysis is carried out using BA tools to provide insights into factors such as influential authors, production countries, top-cited papers and frequent keywords. Visualization of bibliographical data using co-citation network analysis and keyword co-occurrence analysis assisted in understanding the groups (communities) of research themes. We employed k-means clustering and factor analysis methods to further develop these insights. A historiographical direct citation analysis also unveils potential research directions. We observe that RFID applications in the supply chain are likely to benefit from the Internet of Things and blockchain Technology along with the other machine learning and visualization approaches. Originality/value Although several researchers have researched RFID literature in relation to supply chains, these reviews are often conducted in the traditional manner where the author(s) select paper based on their area of expertise, interest and experience. Limitation of such reviews includes authors’ selection bias of studies to be included and limited or no use of advanced BA tools for analysis. This study fills this research gap by conducting an SLR of RFID in supply chains to identify important research trends in this field through the use of advanced BA tools.
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This case captures inventory management process in an Indian convenience store. Unlike retail stores in developed countries, Indian convenience stores are a special format of organized retailing, where retailers open multiple smaller stores in a town instead of one big centralised store. An excellent inventory management process is the key to make such stores perform well. This case describes inventory management problems faced by an Indian convenience store chain and asks students to propose solutions to these problems. This case illustrates how processes realities and their IT solutions differ in an emerging economy. Using inventory management process as an example, this teaching case can introduce students to the process and technological realities in an Indian context and differences between India and the West.
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