Abstract
In this paper, we study inventory share policies in an omni-channel supply network, to contribute to the circular economy (CE) concept. Lateral inventory share implementation provides flexibility and profitability in the supply chain by allowing inventory share between the same echelon locations in a network. Total holding costs and transportation costs can be reduced by lateral inventory share applications, which also contribute to decreased material usage for production over time, as well as reduced CO2 emission released by transportation. Technological and Internet of Things (IoT) developments make it possible for companies to share their real-time information with each other for uninterrupted marketing experiences. With such a connected network, companies aim to increase their profitability and responsiveness to their customers. We explore a well-designed inventory share policy towards the CE concept under an (s, S) inventory control policy. We simulate several pre-defined share designs by Arena 16.0 commercial software and compare their performances in terms of cost, responsiveness, transportation frequency, inventory held, etc. The results show that, by the implementation of a well-designed lateral inventory share policy, an omni-channel network can benefit from decreased holding cost and transportation cost, contributing to the CE concept.
Highlights
By the new channels that have emerged with the widespread use of the internet and mobile devices, the integration of these new channels has led to changes in retail strategies and customer expectations [1]
We examine the contribution of lateral inventory share implementations on the circular economy (CE) concept
We study an omni-channel supply network where online/offline stores are connected under an Internet of Things (IoT) environment so that they can share their inventory information with each other
Summary
By the new channels that have emerged with the widespread use of the internet and mobile devices, the integration of these new channels has led to changes in retail strategies and customer expectations [1]. The recent rapid technological developments have contributed to those new marketing strategy changes from single-channel to multi-channel, cross-channel, and omni-channel commerce [2,3]. By the recent Covid-19 lockdowns, e-commerce shopping experiences have increased drastically. Consumers tend to buy online alternative to physical shopping [4]. Changing customer expectations and increasing consumer needs have forced retailers to re-design their marketing channels [5]. Physical and online channels are managed together by becoming complementary concepts. Retailers tend to implement an integrated management strategy in which multiple channels are connected [1] by sharing real-time information in order to reach many customers and meet their expectations. That radical change in retailing is referred to as omni-channel marketing in literature
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