Marketing Papers

Document Type

Technical Report

Date of this Version

9-1997

Publication Source

Production and Operations Management

Volume

6

Issue

3

Start Page

266

Last Page

276

DOI

10.1111/j.1937-5956.1997.tb00430.x

Abstract

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.

Copyright/Permission Statement

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.

This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.

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Date Posted: 15 June 2018

This document has been peer reviewed.