Grocery omnichannel perishable inventories: performance measures and influencing factors

Purpose: Perishable inventory management for the grocery sector has become more challenging with extended omnichannel activities and emerging consumer expectations. This paper aims to identify and formalize key performance measures of omnichannel perishable inventory management (OCPI) and explore the influence of operational and market-related factors on these measures.

Design/methodology/approach: The inductive approach of this research synthesizes three performance measures (product waste, lost sales, and freshness), and four influencing factors (channel effect, demand variability, product perishability, and shelf life visibility) for OCPI, through industry investigation, expert interviews, and a systematic literature review. Treating OCPI as a complex adaptive system and considering its transaction costs, this paper formalizes the OCPI performance measures and their influencing factors in two statements and four propositions, which are then tested through numerical analysis with simulation.

Findings: Product waste, lost sales, and freshness are identified as distinctive OCPI performance measures, which are influenced by product perishability, shelf life visibility, demand variability, and channel effects. The OCPI sensitivity to those influencing factors is diverse, whereas those factors are found to moderate each other’s effects.

Originality/Value: This paper provides a novel theoretical view on perishables in omnichannel systems. It specifies the OCPI performance, beyond typical inventory policies for cost minimization, while discussing its sensitivity to operations and market factors.

Practical implications: To manage perishables more effectively, with less waste and lost sales for the business and fresher products for the consumer, omnichannel firms need to consider store and online channel requirements and strive to reduce demand variability, extend product shelf life, and facilitate item-level shelf life visibility. While flexible logistics capacity and dynamic pricing can mitigate demand variability, the product shelf life extension needs modifications in product design, production, or storage conditions. OCPI executives can also increase the product shelf life visibility through advanced stock monitoring/tracking technologies (e.g. smart tags or more comprehensive barcodes), particularly for the online channel which demands fresher products.