Date of this Version
Production and Operations Management
Campbell Soup's continuous replenishment (CR) program is a novel innovation designed to improve the efficiency of inventory management throughout the supply chain. With CR (1) retailers pay a constant wholesale price but continue to participate in consumer promotions, (2) retailers transmit to the supplier daily inventory information via electronic data interchange (EDI), and (3) the supplier assumes responsibility for managing retailer inventories, i.e., vendor managed inventories (VMI). We develop simple inventory management rules to operate CR, and we test these rules with a simulation using actual demand data provided by Campbell Soup. On this sample we find that retailer inventories were reduced on average by 66% while maintaining or increasing average fill rates. This improvement reduces a retailer's cost of goods sold by ~1.2%, which is significant in the low profit margin grocery industry. Furthermore, these savings could have been achieved without VMI.
This is the pre-peer reviewed version of the following article: [Cachon, G. & Fisher, M. (1997). Campbell Soup's Continuous Replenishment Program: Evaluation and Enhanced Inventory Decision Rules. Production and Operations Management 6, no. 3: pp. 266-276], which has been published in final form at http://dx.doi.org/10.1111/j.1937-5956.1997.tb00430.x.
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Cachon, G. P., & Fisher, M. (1997). Campbell Soup's Continuous Replenishment Program: Evaluation and Enhanced Inventory Decision Rules. Production and Operations Management, 6 (3), 266-276. http://dx.doi.org/10.1111/j.1937-5956.1997.tb00430.x
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Date Posted: 15 June 2018
This document has been peer reviewed.