Structural supply chain collaboration among grocery manufacturers

Abstract

Both academicians and practitioners have explored the important topic of supply chain collaboration, however, most have focused on unilateral coordination via pricing signals or tactical opportunities such as Collaborative Planning, Forecasting and Replenishment (CPFR). Our research fills a literature gap by quantifying the opportunity for strategic, multi-lateral collaboration through a shared distribution network. Through cost modeling of a factorial combination of scenarios for two grocery manufacturers, we show that: 1. Reducing demand variability, the focus of CPFR, lowers inventory levels but has little effect upon the larger elements of logistics cost: transportation and distribution center operations 2. Structural supply chain collaboration offers a large opportunity…but some forms of collaboration combined with certain manufacturer characteristics may add rather than reduce cost 3. The greatest opportunity for bottom-line savings accrues to the most disadvantaged manufacturers…those with low case sales, bulky products, and less costly product