A distribution method for bullwhip reduction

2019

IJRDM

Purpose The purpose of this paper is to investigate the costs/benefits of implementing the cross-docking strategy in a retail supply chain context using a cost model. In particular, the effects of using different typologies of cross-docking compared to traditional warehousing are investigated, taking into consideration an actual case study of a fast-moving consumer goods (FMCG) company and a major French retailer. Design/methodology/approach The research is based on a case study of an FMCG company and a major French retailer. The case study is used to develop a cost model and to identify the main cost parameters impacted by implementing the cross-docking strategy. Based on the cost model, a comparison of the main cost factors characterizing four different configurations is made. The configurations studied are, the traditional warehousing strategy (AS-IS configuration, the reference configuration for comparison), where both retailers and suppliers keep inventory in their warehouses; the cross-docking pick-by-line strategy, where inventory is removed from the retailer warehouse and the allocation and sorting are performed at the retailer distribution centre (DC) level (TO-BE1 configuration); the cross-docking pick-by-store strategy, where the allocation and sorting are done at the supplier DC level (TO-BE2 configuration); and finally a combination of cross-docking pick-by-line strategy and traditional warehousing strategy (TO-BE3 configuration). Findings The case study provides three main observations. First, compared to traditional warehousing, cross-docking with sorting and allocation done at the supplier level increases the entire supply chain cost by 5.3 per cent. Second, cross-docking with allocation and sorting of the products done at the retailer level is more economical than traditional warehousing: a 1 per cent reduction of the cost. Third, combining cross-docking and traditional warehousing reduces the supply chain cost by 6.4 per cent. Research limitations/implications A quantitative case study may not be highly generalisable; however, the findings form a foundation for further understanding of the reconfiguration of a retail supply chain. Originality/value This paper fills a gap by proposing a cost analysis based on a real case study and by investigating the costs and benefits of implementing different configurations in the retail supply chain context. Furthermore, the cost model may be used to help managers choose the right distribution strategy for their supply chain.

Section: Results Of the Analysissupporting

confidence: 83%

Costs and benefits of using cross-docking in the retail supply chain

2019

IJRDM

“…It fills a gap in the literature on the impact of order batching on the bullwhip effect in a XD. A few studies have been conducted to analyze the impact of XD strategy on the bullwhip effect (Eftekhar, Makui, and Lumsden 2008; Kadivar and Shirazi 2018), and this article has studied the impact of order batching on the bullwhip effect in a XD strategy compared to traditional warehousing.…”

Section: Literature Reviewmentioning

confidence: 99%

“…In addition, the XD distribution strategy can reduce the bullwhip effect as it brings a direct connection between the store and the supplier DC (Eftekhar, Makui, and Lumsden 2008;Kadivar and Shirazi 2018;Benrqya 2021). The inventory held at the retailer DC adds variability in the supply chain due to forecasting, ordering, and safety stock.…”

mentioning

confidence: 99%

“…It should be noted that the works cited above present some limitations. With regard to supply chain structure, Eftekhar, Makui, and Lumsden (2008) and Kadivar and Shirazi (2018) have compared the XD and TW based only on one single retailer/store supply chain. In addition, the two papers have focused on the impact of the lead time, forecasting model, and demand process to analyze the reduction in the bullwhip effect.…”

mentioning

confidence: 99%

“…An important literature has developed in recent years analyzing and comparing the performances of XD and TW strategies (Kreng and Chen 2008; Gebennini et al 2013; Benrqya et al 2014). However, only a few papers have been dedicated to discussing the impact of XD on the bullwhip effect; in fact, Eftekhar, Makui, and Lumsden (2008) and Kadivar and Shirazi (2018) are among the few works that have analyzed the impact of a XD strategy on the bullwhip effect.…”

mentioning

confidence: 99%

See 2 more Smart Citations

Order Batching and the Bullwhip Effect Reduction in a Cross‐Docking Strategy

2022

Transp. j.

The purpose of this article is to analyze the effect of order batching on the bullwhip effect in a cross-docking strategy. The model proposed uses simulation to analyze empirically the impact of order batching on the bullwhip effect in cross-docking strategy compared to traditional warehousing. The study is based on a case study of a fast-moving consumer goods company and a French retailer. In the model, a three-stage supply chain composed of one supplier DC, one retailer DC, and 10 retailer stores is considered. The order-up-to (OUT) level policy is used to control inventory at each stage. The demand is forecasted using a simple moving average scheme. The empirical investigation shows that the use of cross-docking leads to a bullwhip effect gain upstream in the supply chain in all cases and situations. Moreover, we show that there exists a high positive correlation between the physical volume of a product (measured by the number of items per pallet) and the bullwhip effect gain. Finally, the increase in lead time to the stores has little impact on the bullwhip effect gain upstream in the supply chain.

An examination of the effects of cross-docking on retail out of stock

2021

IJRDM

PurposeThe objective of this paper is to examine the impact of cross-docking on the retail out of stock (OOS).Design/methodology/approachThe research is based on a three-phase Delphi study consisting of a seeding/literature review phase, a pre-testing phase and a three-round Delphi study. The Delphi study used in this paper brings together leading supply chain management experts with leading academics.FindingsThe findings of the paper show that cross-docking may impact the retailers OOS drivers positively or negatively. The study demonstrates that cross-docking has a negative impact on ordering, placement, delivery, handling, DC handling and receipt. On the other hand, cross-docking has a positive effect on supplier ordering. Finally, academics and supply chain managers disagreed on the effect of cross-docking on the promotions driver. Academics consider that cross-docking has a positive impact on promotions OOS driver, while supply chain managers believe the opposite.Research limitations/implicationsThe Delphi study was administrated to supply chain managers from a single major FMCG company, which is a supplier of grocery retailers. By including supply chain managers from the retailers' side, more perspectives on the impact of cross-docking on the OOS drivers can be investigated.Originality/valueThe study develops an original instrument to investigate the impact of cross-docking on OOS drivers. This is the first scholarly work to investigate the relationship between a distribution strategy and the OOS drivers.