An integrative approach to determine store delivery patterns in grocery retailing

• We consider the tactical problem of selecting delivery patterns for retail stores.
• Relevant dependencies along the internal supply chain are identified and analyzed.
• Relevant costs are modeled and reflected in a binary decision model.
• The case of a major retail company yields substantial cost savings potential of 5.3%.
• Integration of instore operations and upstream logistics is of particular importance.

This article focuses on the tactical problem of selecting delivery patterns according to which grocery stores are repetitively supplied with products from different order segments by retail-owned distribution centers. The research environment considered consists of logistics processes in DCs, transportation and instore logistics. We identify dependencies on the delivery patterns selected and specify the relevant costs. These costs are reflected in the objective function of a binary selection model. Implementing and applying the model to the real case of a major European retail company yields substantial cost savings potential of 5.3%, amounting to tens of millions of euros per annum.