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Analyzing the Efficient Execution of In-Store Logistics Processes in Grocery Retailing - The Case of Dairy Products

Gerald Reiner, Christoph Teller & Herbert Kotzab

Abstract In this article, we examine in-store logistics processes for handling dairy products, from the incoming dock to the shelves of supermarkets and hypermarkets. The efficient execution of the in-store logistics related to such fast-moving, sensitive, and essential items is challenging and crucial for grocery retailers' sales, profits, and image. In our empirical study, we survey in-store logistics processes in 202 grocery supermarkets and hypermarkets belonging to a major retail chain in central Europe. Using a data envelopment analysis (DEA) and simulation, we facilitate process benchmarking. In particular, we identify ways of improving in-store logistics processes by showing the performance impacts of different managerial strategies and tactics. The DEA results indicate different efficiency levels for different store formats; the hybrid store format of the small hypermarket exhibits a comparatively worse performance in the analyzed execution of in-store logistics processes. The process simulation analysis reveals that the strategic and tactical design of in-store logistics processes (such as store locations/layouts, capacity management, reorder time, order period, and safety stock factors) lead to substantial service performance improvements (such as higher on-shelf availability combined with reduced inventory obsolescence costs). The results also show marginal improvements in the performance figures when delivery delays and damage to products are reduced.
   
Keywords in-store logistics;
data envelopment analysis;
process simulation;
grocery retailing
   
Citation Reiner, G., Teller, C., & Kotzab, H. (2013). Analyzing the Efficient Execution of In-Store Logistics Processes in Grocery Retailing - The Case of Dairy Products. Production and Operations Management, 22(4), 924-939.
   
Type Journal article (English)
Date of appearance 2-8-2013
Journal Production and Operations Management
Volume 22
Issue 4
Pages 924-939
URL http://dx.doi.org/10.1111/poms.12003