Optimizing the distribution network of perishable products to Small Format Stores
Name
827220734-MIT.pdf
Description
Full printable version
Size
10.38 MB
Format
Adobe PDF
Checksum (MD5)
61339f723332ea46289fdac66b209d50
Author(s)
Khandekar, Sachin
Titova, Aleksandra
Advisor(s)
Edgar Blanco.
Date Issued
2012
Publisher
Massachusetts Institute of Technology
Abstract
FoodCo is a leading foods company that has reputed brands and global operations with revenues in excess of USD 5Bn. Although FoodCo's sales to Small Format Stores (SFS) customers are a small part of the overall sales, it is a fast growing segment where FoodCo sees future. However, distribution to the SFS channel is a challenge - FoodCo needs to ship refrigerated and frozen products to over 40,000 stores through multiple distributors. Furthermore, such stores are characterized by low sales velocity relative to traditional retailers. The transactional nature of FoodCo's supply chain relationship with channel partners creates challenges for FoodCo in influencing key decisions in the supply chain. To tackle the problem, the authors reviewed the literature and interviewed experts and practitioners to understand best practices in Consumer Packaged Goods (CPG) companies across the world serving SFS. Although there were few direct parallels, collaboration was found to be a practice that successful companies employed. The authors also analyzed data including store sales, orders to FoodCo, promotions and supply chain costs, etc. They created a quantitative model that suggested that fees paid out to distributors for their full service are not proportional to the costs. They also concluded that FoodCo's lack of visibility into the sell-through demand made it subject to a strong bullwhip effect, leading to large amounts of inventories and shrinkage. Further, they identified that store sales were scattered geographically and that direct shipments to high selling stores were not possible. Based on the analysis, the authors recommend that FoodCo start collaborating with their channel partners. First, FoodCo could communicate the value of collaboration to its channel partners in order to gain their support. Then, FoodCo and the retailers can share their demand plan with each other, foster collaboration and elevate the manufacturer-retailer relationships to a strategic level. Further, FoodCo could build scale by consolidating volumes through a single re-distributor for channels where the sales volumes are very low.
Description
Thesis (M. Eng. in Logistics)--Massachusetts Institute of Technology, Engineering Systems Division, 2012.
Cataloged from PDF version of thesis.
Includes bibliographical references (p. 66-67).
Subjects
Engineering Systems Division.
MIT Department
Massachusetts Institute of Technology. Engineering Systems Division
Terms of Use
M.I.T. theses are protected by
copyright. They may be viewed from this source for any purpose, but
reproduction or distribution in any format is prohibited without written
permission. See provided URL for inquiries about permission.
copyright. They may be viewed from this source for any purpose, but
reproduction or distribution in any format is prohibited without written
permission. See provided URL for inquiries about permission.
Persistent DSpace Link
