The Interaction of Human Resources and Managerial Systems as they affect In-Store Replenishment Operations- ISSN online 1624-6039

Authors: Trautrims, Alexander; Grant, David B.; Wong, Chee Source: Supply Chain Forum: an International Journal, Volume 13, Number 2, 2012, pp. 51-61

This study adds to our knowledge about in-store logistics processes in retail supply chains by identifying the tasks involved in and the factors affecting in-store replenishment. It also shows the interaction between store employees and in-store replenishment systems which help to explain and improve in-store logistics processes and the issues of OSA and OOS. OOS can be caused at many points in the supply chain; however, retail logistics research in the past has tended to ignore the last 50 yards or metres from the back of the retail store to the store shelf especially the impact and involvement of retail workers or human resources in OSA processes. In this study, from an employees perspective, in-store replenishment operations consist of four task areas: ordering, data, shelf fulfilment, and inventory. To fulfil their replenishment tasks, employees require more or less interaction with the managerial and technological systems of their company. Some retailers used standardised and repetitive replenishment procedures and on the other side some companies allowed their employees more room for creativity. Even within the same company individual employees can take different positions on the same issue. A store manager at department store retailer commented on the researchers question of what the usual response to a stock out would be: It is dependent on store management and how they want to resolve the issue. A store manager at grocery retailer answered the question whether there are rules for back-office organisation: Well, I believe there are some rules but actually it was not followed. This suggests future research should take into account job satisfaction of logistics workers because these employees work under the exact same conditions but have different logistics decision-making power and different levels of control and boundaries. The study also noticed gaps between what central functions believed happened at store level and what actually happened by the store employees. This can be considered as potential evidence that instore logistics processes have not so far been fully considered in end-o-end retail supply chains. When interviews at HO level was done about the store processes, they said very simple processes at the store and that running a back of store is quite common sense really. Its not hard work and therefore formal skilling was not necessary. But actually logistics employees can have a large impact on the firms performance. The study showed that the less the employees understood about the supply chain, the more likely they come with

isolated decisions with negative effects. For some retail concepts and products it is essential that shop floor employees can access information from the system and also feed information into the system. For example the ordering of fresh fruits and vegetables depended highly on local judgement at the store. Employees either might submit information to a system or then are provided with response alternatives or the system provides the employee with the information needed to make an informed decision. The availability of the right information to the right employees at the store level and their interaction with the systems will therefore need to be considered in supply chain planning. Generally, the vertical bar of the T-shape indicating deep subject knowledge is considered for logistics and replenishment: human resources have the requisite knowledge to provide products to the back of the retail stores in a one-way flow process. However, the underside of the horizontal bar appears to be a boundary point where this knowledge diverges for in-store employees. Thus, there may be a knowledge and research disconnect at that point where usual logistics research focuses on the vertical bar and retail and marketing research focuses on the horizontal bar. This disconnect suggests that more interdisciplinary efforts between marketing, logistics and supply chain management and organisational behaviour are needed to better understand this phenomena. There must be within the store replenishment employees who had decision-making power and equipped with the skills they require to make right decisions. These employees require skills on the horizontal bar of the T-shaped skills profile because they need to understand the impact of their decisions on other areas of the supply chain. By contrast, retail managers might also hire employees with only single repetitive jobs in the replenishment operations and who therefore do not require an understanding of the system. These employees can be allocated only to a position that has an extremely limited decision making impact. With further specialisation in retail stores, retail managers need to give thought to a separation between logistics and sales tasks at the store level. The study found examples of a separation between those activities, particularly at the non-grocery retailers where customers were demanding a higher level of sales advice. In grocery retailing, however, most shop floor employees were mainly engaged with logistics tasks and needed wider and more general skills in the replenishment operations. At the same time these employees had a potentially stronger impact on the systems in response to a more volatile environment. Nevertheless, management in grocery retailing can focus decision-making power towards a few higherskilled employees at the store and limit access to decision making for lower-skilled replenishment staff. There must be consideration towards simplification of in-store logistics tasks and the reduction of negative impact from poor decision making. Most companies in the study used systems that developed organically over time often without much reflection on the involvement of their store personnel, and thus the management of their in store logistics employees can be seen as an area for the improvement of retail logistics and store execution. Future research may want to test the strength of these factors to different retail sectors.