Centralised grocery supply chain planning: improved exception management

Abstract

Purpose – The purpose of this paper is to present an operations model for retail replenishment collaboration and identifies its expected benefits and limitations for the members of a grocery supply chain. Design/methodology/approach – A case study is conducted on a development project between a grocery wholesaler and two grocery product suppliers. Data are collected through semi-structured interviews with key respondents from four different companies. Findings – Despite advances in collaborative practices in grocery supply chains, retail store replenishment management faces challenges. In particular, demand exceptions management is a challenge in the grocery industry. A replenishment model called Collaborative Buyer-Managed Forecasting (CBMF) creates a proactive planning approach and a platform for close collaboration in the supply chain. The centralised forecasting transforms retailer sales data into a plan which serves the whole supply chain by creating one-order forecast. The CBMF model facilitates efficient demand management, improves demand responsiveness and promotes better availability of products in retail stores. Research limitations/implications – CBMF provides a replenishment planning model for the whole supply chain. It is tested to a limited extent in one supply chain. Practical implications – The study provides managers with a better understanding of the benefits of centralised forecasting and closer replenishment collaboration, especially during periods of exceptional demand. Originality/value – A new approach for managing demand in grocery supply chains with centralised forecasting is provided.