Automatic replenishment of perishables in grocery retailing

Abstract

Purpose The purpose of this paper is to investigate the impact of sharing and utilizing remaining shelf life (RSL) information from grocery stores by the use of age-based replenishment policies for perishables. Design/methodology/approach The performance is evaluated through a discrete event simulation model, which mirrors a part of one of Norway’s largest grocery retailer and uses their POS data to reflect a realistic demand pattern of 232 stores for one year. Findings The findings indicate that a current age-based replenishment policy (EWA policy) provides a significant improvement of 17.7 percent increase in availability for perishables with a shelf life between 4 and 11 days, but suffers from high inventory levels and only reduces waste by 3.4 percent compared to a base stock policy. A proposed adjustment to the EWA policy, EWASS, provides a more balanced performance in the conducted study with a reduction of 10.7 percent waste and 10.3 percent increase in availability by keeping the same average inventory level. Practical implications Sharing and utilizing RSL information for replenishment of perishables with a predetermined shelf life between 6 and 11 days can be beneficial, and could enable the replenishment processes to be automated. However, for products with longer shelf life, the benefits slowly diminish. Originality/value The study proposes a new age-based replenishment policy which in the conducted study showed a more balanced performance improvement, in both waste and availability, compared with previous replenishment policies.