Functional Bottlenecks of Wholesaler – Retailer Two Tiered Supply Chain in Distribution Channel of Food Production

Document Type : Scientific Paper

Authors

1 Shiraz University

2 Eram campus

Abstract

One of the success factors of any production firm is optimizing the distribution channel of products and identifying bottlenecks in each level of the supply chain can be a basis for selecting and managing the supply chain in the distribution channel. Therefore, this research has been conducted with the aim of identifying the functional bottlenecks of the       wholesaler-retailer two-tier supply chain in the distribution channel of food production units. This research was conducted in the form of a descriptive and applied research. Initially, in the qualitative phase, by using qualitative content analysis and by interviewing 26 experts in this field, the functions of wholesale and retail levels of food were conceptualized as         first-order codes and then as second-order codes. Next, in order to explain the model, using the opinions of 61 economic experts in the supply chain field, the degree of influence and effectiveness of the functions was determined using the DEMATEL technique. Findings show that at the wholesale level, sales promotion, compliance with market rules and ethics, active cooperation with the manufacturer, and financing of the chain are the main functions. At the same time, providing services to consumers, obeying market rules and ethics, promoting sales, financing the chain, and optimizing the product portfolio are considered the most effective functional bottlenecks in the retail sector. Based on the results, the identified bottlenecks can be used to map the value stream of distribution channels to identify process improvement opportunities for a more efficient supply chain. Also, the managers of food industry units, while familiarizing themselves with the key performance indicators of the chain, can consider the parts that can be improved in smoothing the flow of goods, money and information in the supply chain.

Keywords

Main Subjects

References

  • Haulder, A. Kumar, and N. Shiwakoti, “An analysis of core functions offered by software packages aimed at the supply chain management software market,” Computers & Industrial Engineering, vol. 138, 106116, 2019. ‏
  • Zhang, M.G. Yalcin, and D.N. Hales, “Elements of paradoxes in supply chain management literature: a systematic literature review,” International Journal of Production Economics, vol. 232, 107928, 2021.
  • Deshpande, and J.M. Swaminathan, “Introduction to the special issue on responsible operations and supply chain management,” Manufacturing & Service Operations Management, vol. 22, no 6, pp. 1107-1111, 2020.
  • Zhong, X. Xu, and L. Wang, “Food supply chain management: systems, implementations, and future research,” Industrial Management & Data Systems, vol. 117, no. 9, pp. 2085-2114, 2017.
  • Nie, L. Zhong, H. Yan, and W. Yang, “Retailers' distribution channel strategies with cross-channel effect in a competitive market,” International Journal of Production Economics, vol. 213, pp. 32-45, 2019.
  • Tian, and B. Jiang, “Effects of consumer‐to‐consumer product sharing on distribution channel,” Production and operations management, vol. 27, no. 2, pp. 350-367, 2018.
  • [C.F. Durach, and F. Wiengarten, “Supply chain integration and national collectivism,” International Journal of Production Economics, vol. 224, 107543, 2020.
  • V. Kozlenkova, G.T.M. Hult, D.J. Lund, J.A. Mena, and P. Kekec, “The role of marketing channels in supply chain management,” Journal of Retailing, vol. 91, no. 4, pp. 586-609, 2015.
  • A. Hoseini Shekarabi, A. Gharaei, and M. Karimi, “Modelling and optimal lot-sizing of integrated multi-level multi-wholesaler supply chains under the shortage and limited warehouse space: generalised outer approximation,” International Journal of Systems Science: Operations & Logistics, vol. 6, no. 3, pp. 237-257, 2019.
  • Hameli, “A Literature Review of Retailing Sector and Business Retailing Types,” ILIRIA International Review, vol. 8, no. 1, pp. 67-87, 2018.
  • Hokami Ghasemi, M. Shirali Kelishadi, M. Bararti, and M. Bayati, “Identifying and prioritizing bottlenecks for implementing electronic supply chain in Mobarakeh Steel Industries,” in 2nd International Conference on Interdisciplinary Studies in Management and Engineering (ICISME-2020), 12th March 2020, University f Tehran. (in Persian)
  • Alikhani, and S.A. Torabi, “Retail supply chain network redesign based on multiple resilience capabilities,” Modern Researches in Decision Making, vol. 3, no. 4, pp. 73-102, 2018. (in Persian)
  • Mostafaeian, “Identification of supply chain bottlenecks in order to provide the best solution using fuzzy ANP technique (cluster of sesame products in Yazd province,” Master Thesis of Yazd University of Science and Art, 2014. (in Persian)
  • Sharifi, H.R. Nasabi, M.R. Yavarzadeh, “Identifying and Prioritizing Factors Effecting on Efficiency of Goods Distribution Network,” Journal of Business Management, vol. 5, no. 2, pp. 115-130, 2013.
  • K. Mangla, Y.K. Sharma, P.P. Patil, G. Yadav, and J. Xu, “Logistics and distribution challenges to managing operations for corporate sustainability: Study on leading Indian diary organizations,” Journal of Cleaner Production, vol. 238, 117620, 2019.
  • Gawankar, S. Kamble, and R. Raut, “Development, measurement and validation of supply chain performance measurement (SCPM) scale in Indian retail sector,” Benchmarking: An International Journal, vol. 23, no. 1, pp. 25-60, 2016.
  • Behnamian, and M.M. Bashar, “Proposing a game-theoretic approach for cooperative multi-echelon fuzzy supply chain with discount and marketing costs,” Industrial Management Studies, vol. 56, pp. 51-86, 2020. (in Persian)
  • Ghasemy Yaghin, and G. Ahmadi, “Evaluation of centralized distribution system in clothing industry with risk-pooling approach (a case study),” Journal of Supply Chain Management, vol. 65, pp. 24-46, 2019. (in Persian)
  • Bahrami, H.R. Pasandideh, and M. Mohammadi, “Modeling and solving of A Multiproduct Vendor Managed Inventory System with stochastic warehouse capacity and budget constraints,” Industrial Management Studies, vol. 51, pp. 1-27, 2018.
  • Y. Jung, W.T. Huh, and K.S. Park, “Impact of the arm’s length regulation on a supply chain with asymmetric retailers,” European Journal of Operational Research, In Press, 2021, https://doi.org/10.1016/j.ejor.2021.08.032.
  • MacDonald, P. Cappers, D. Callaway, and S. Kiliccote, “Demand response providing ancillary services: A comparison of opportunities and challenges in US wholesale markets,” Lawrence Berkeley National Laboratory. 2021, Retrieved from https://escholarship.org/uc/item/1ct1g5j9
  • S. Ali, and R. Kaur, “Effectiveness of corporate social responsibility (CSR) in implementation of social sustainability in warehousing of developing countries: A hybrid approach,” Journal of Cleaner Production, vl. 324, 129154, 2021, https://doi.org/10.1016/j.jclepro.2021.129154.
  • de Vass, H. Shee, and S.J. Miah, “IoT in supply chain management: a narrative on retail sector sustainability,” International Journal of Logistics Research and Applications, vl. 20, no. 1, pp. 35-52, 2020.
  • Marshman, M. Brear, M. Jeppesen, and B. Ring, “Performance of wholesale electricity markets with high wind penetration,” Energy Economics, vl. 89, 104803, 2020.
  • B. Sheu, and H.T. Kuo, “Dual speculative hoarding: A wholesaler-retailer channel behavioral phenomenon behind potential natural hazard threats,” International journal of disaster risk reduction, vl. 44, 101430, 2020. ‏
  • A. Gawankar, A. Gunasekaran, and S. Kamble, “A study on investments in the big data-driven supply chain, performance measures and organisational performance in Indian retail 4.0 context,” International Journal of Production Research, vol. 58, no. 5, pp. 1574-1593, 2020. ‏
  • Sufiyan, A. Haleem, S. Khan, and M.I. Khan, “Evaluating food supply chain performance using hybrid fuzzy MCDM technique,” Sustainable Production and Consumption, vl. 20, pp. 40-57, 2019. ‏
  • K. Woo, I. Milstein, A. Tishler, and J. Zarnikau, “A wholesale electricity market design sans missing money and price manipulation,” Energy Policy, vol. 134, 110988, 2019. ‏
  • Y. Ke, and J.H. Bookbinder, “Coordinating the discount policies for retailer, wholesaler, and less-than-truckload carrier under price-sensitive demand: a tri-level optimization approach. International,” Journal of Production Economics, vl. 196, pp. 82-100, 2018. ‏
  • Jain, H. Mamani, and K. Moinzadeh, “Impact of retailers with knowledge of supplier's inventory on supply chain performance,” Production and Operations Management, vol. 26, no. 3, pp. 542-556, 2017.
  • Anand, and N. Grover, “Measuring retail supply chain performance: Theoretical model using key performance indicators (KPIs),” Benchmarking: An international journal, vol. 22, no. 1, pp. 135-166, 2015.
  • Narsimhalu, V. Potdar, and A. Kaur, “A case study to explore influence of traceability factors on Australian food supply chain performance,” Procedia-Social and Behavioral Sciences, vl. 189, pp. 17-32, 2015. ‏
  • Shin, and B. Eksioglu, “An empirical study of RFID productivity in the US retail supply chain,” International Journal of Production Economics, vol. 163, pp. 89-96, 2015. ‏
  • Pantano, and M. Viassone, “Engaging consumers on new integrated multichannel retail settings: Challenges for retailers,” Journal of Retailing and Consumer Services, vol. 25, pp. 106-114, 2015. ‏
  • Shafiee, F.H. Lotfi, and H. Saleh, “Supply chain performance evaluation with data envelopment analysis and balanced scorecard approach,” Applied Mathematical Modelling, vol. 38, n. 21-22, pp. 5092-5112, 2014.
  • H. Donassolo, and C.A. de Matos, “The predictors of sales performance: a study with wholesale sellers,” Revista Brasileira de Gestão de Negócios-RBGN, vol. 16, no. 52, pp. 448-465, 2014.
  • P. Vlachos, “A hierarchical model of the impact of RFID practices on retail supply chain performance,” Expert Systems with Applications, vol. 41, no. 1, pp. 5-15, 2014. ‏
  • Bourlakis, G. Maglaras, E. Aktas, D. Gallear, and C. Fotopoulos, “Firm size and sustainable performance in food supply chains: Insights from Greek SMEs,” International Journal of Production Economics, vl. 152, pp. 112-130, 2014.
  • J. Arnold, E. Briggs, T.D. Landry, and T.A. Suter, “The development of core retailer community functions,” Journal of Marketing Theory and Practice, vol. 21, no. 3, pp. 243-256, 2013. ‏
  • Bezawada, and K. Pauwels, “What is special about marketing organic products? How organic assortment, price, and promotions drive retailer performance,” Journal of Marketing, vol. 77, no. 1, pp. 31-51, 2013.
  • Y. Rawwas, and K.N. Iyer, “How do small firms possibly survive? A comparison study of marketing skills and logistics infrastructure of small and large wholesalers,” International business review, vl. 22, no. 4, pp. 687-698, 2013. ‏
  • K. Muteru, “Factors influencing food security of farmers practicing peri-urban agriculture crop production in Naivasha Municipality,” Doctoral dissertation, University of Nairobi, 2013.‏
  • Gawankar, S.S. Kamble, and R. Verma, “Development, measurement and validation of supply chain management practices scale in Indian retail sector,” International Journal of Procurement Management, vl. 6, no. 5, pp. 495-522, 2013. ‏‏
  • S. Kasim, I.D. Rajamanoharan, and N.H. Omar, “An integrated supply chain management model for value creation: case evidence,” International Journal of Business Performance and Supply Chain Modelling, vol. 4, no. 3-4, pp. 379-401, 2012. ‏
  • Segetlija, J. Mesarić, and D. Dujak, “Importance of distribution channels-marketing channels-for national economy,” in 22nd CROMAR Congress, 2011. ‏
  • [L. Bobot, “Functional and dysfunctional conflicts in retailer supplier relationships,” International Journal of Retail & Distribution Management, vol. 39, no. 1, pp. 25-50, 2011.
  • Holmberg, and D. Newbery, “The supply function equilibrium and its policy implications for wholesale electricity auctions,” Utilities Policy, vol. 18, n. 4, pp. 209-226, 2010.
  • K. Havaldar, “Business marketing: Text and cases,” NY: McGraw-Hill Education, 2010.
  • Walter, “The new case for functional separation in wholesale financial services,” Available at SSRN 1442148, 2009.
  • Wolak, “An assessment of the performance of the New Zealand wholesale electricity market,” Report for the New Zealand Commerce Commission, 2009. ‏
  • Tang, and J. Huang, “Impact of web site functions on e-business success in chinese wholesale and retail industries,” Tsinghua Science and Technology, vol. 13, no. 3, pp. 368-373, 2008. ‏
  • P. De Brito, V. Carbone, and C.M. Blanquart, “Towards a sustainable fashion retail supply chain in Europe: Organisation and performance,” International journal of production economics, vol. 114, n. 2, pp. 534-553, 2008. ‏
  • C. Moul, “Retailer entry conditions and wholesaler conduct: The theatrical distribution of motion pictures,” International Journal of Industrial Organization, vol. 26, no. 4, pp. 966-983, 2008. ‏‏
  • Wang, and L. Liu, “Coordination in a retailer-led supply chain through option contract,” International Journal of Production Economics, vol. 110, no. 1-2, pp. 115-127, 2007. ‏
  • Wigley, and C.M. Moore, “The operationalisation of international fashion retailer success,” Journal of Fashion Marketing and Management: An International Journal, vol. 11, no. 2, pp. 281-296, 2007.
  • Sheu, H.R. Yen, and B. Chae, “Determinants of supplier retailer collaboration: evidence from an international study,” International Journal of Operations & Production Management, vol. 26, no. 1, pp. 24-49, 2006.
  • E. Chung, B. Sternquist, and Z. Chen, “Retailer–buyer supplier relationships: The Japanese difference,” Journal of Retailing, vol. 82, no. 4, pp. 349-355, 2006. ‏
  • Y. Eng, “The influence of a firm's cross functional orientation on supply chain performance,” Journal of Supply Chain Management, vl. 41, no. 4, pp. 4-16, 2005.‏
  • Dawson, and R. Larke, “Japanese retailing through the 1990s: retailer performance in a decade of slow growth,” British Journal of Management, vol. 15, no. 1, pp. 73-94, 2004.‏
  • Aldin, N., and F. Stahre, “Electronic commerce, marketing channels and logistics platforms––a wholesaler perspective,” European Journal of Operational Research, vl. 144, no. 2, pp. 270-279, 2003.
  • T. Chan, “Performance measurement in a supply chain,” The international journal of advanced manufacturing technology,” vol. 21, n. 7, pp. 534-548, 2003. ‏
  • X. Li, Z. Huang, J. Zhu, and P.Y. Chau, “Cooperative advertising, game theory and manufacturer–retailer supply chains,” Omega, vol. 30, no. 5, pp. 347-357, 2002. ‏
  • Boyacı, and G. Gallego, “Coordinating pricing and inventory replenishment policies for one wholesaler and one or more geographically dispersed retailers,” International Journal of Production Economics, vol. 77, no. 2, pp. 95-111, 2002. ‏
  • Huang, S.X. Li, and V. Mahajan, “An analysis of manufacturer retailer supply chain coordination in cooperative advertising,” Decision sciences, vl. 33, no. 3, pp. 469-494, 2002. ‏
  • Basuroy, M.K. Mantrala, and R.G. Walters, “The impact of category management on retailer prices and performance: Theory and evidence,” Journal of Marketing, vol. 65, no. 4, pp. 16-32, 2001. ‏
  • Sudhir, “Structural analysis of manufacturer pricing in the presence of a strategic retailer,” Marketing Science, vol. 20, no. 3, pp. 244-264, 2001. ‏
  • M.M. Jamal, B.R. Sarker, and S. Wang, “Optimal payment time for a retailer under permitted delay of payment by the wholesaler,” International Journal of Production Economics, vol. 66, no. 1, pp. 59-66, 2000. ‏
  • T. Keh, “Measuring retailer performance: Towards an understanding of productivity. Journal of Targeting,” Measurement and Analysis for Marketing, vol. 9, no. 2, pp. 160-173, 2000.
  • Riemers, “Functional relations in distribution channels and location patterns of the Dutch wholesale sector. Geografiska Annaler: series B,” human geography, vol. 80, no. 2, pp. 83-100, 1998. ‏
  • M. Lassar, “Control systems in supplier-retailer relationships and their impact on brand performance,” Journal of Retailing and Consumer Services, vl. 5, no. 2, pp. 65-75, 1998. ‏
  • De Craene, and J. Viaene, “Evaluating the performance of meat product wholesaling in Belgium,” Journal of Retailing and Consumer Services, vl. 2, no. 3, pp. 185-190, 1995. ‏
  • Das, and R. Tyagi, “Wholesaler: a decision support system for wholesale procurement and distribution,” International Journal of Physical Distribution & Logistics Management, vol. 24, no. 10, pp. 4-12, 1994.
  • Zahir, and R. Sarker, “Joint economic ordering policies of multiple wholesalers and a single manufacturer with price-dependent demand functions,” Journal of the Operational Research Society, vol. 42, no. 2, pp. 157-164, 1991.‏
  • M. Gales, and R.S. Blackburn, “An analysis of the impact of supplier strategies and relationships on small retailer actions, perceptions, and performance,” Entrepreneurship Theory and Practice, vol. 15, n. 1, pp. 7-22, 1990.
  • Eyvazlo, M. Alvandi, and M. Nasrolahi, “Investigating the factors affecting firm`s resilient in supply chain disruptions situation (Case study: Alborz industrial town manufacturing firm’s in Qazvin province),” Journal of Supply Chain Management, vol. 64, pp. 33-50. (in Persian)
  • M. Hassan, and M.N. Abbasi, “A review of supply chain integration extents, contingencies and performance: A post Covid-19 review,” Operations Research Perspectives, vol. 8, 100183, 2021.
  • Matsui, “Should a retailer bargain over a wholesale price with a manufacturer using a dual-channel supply chain?,” European Journal of Operational Research, In Press, https://doi.org/10.1016/j.ejor.2021.09.012

  • Goić, C. Levenier, R. Montoya, “Drivers of customer satisfaction in the grocery retail industry: A longitudinal analysis across store formats,” Journal of Retailing and Consumer Services, vol. 60, 102505, 2021.

    https://doi.org/10.1016/j.jretconser.2021.102505

Files

History

  • Receive Date: 11 December 2021
  • Revise Date: 16 January 2022
  • Accept Date: 03 October 2022
  • Publish Date: 21 January 2023

Share

How to cite

Statistics