Replenishment Strategies for Micro‐Retailers in Developing Countries

When formal distribution channels are absent in developing countries, micro‐retailers travel a long distance to replenish their stocks directly from suppliers. This “informal” replenishment strategy is inefficient due to high imputed travel costs involved in the replenishment process. To improve efficiency, one “hybrid” replenishment strategy has emerged under which one of the micro‐retailers in a neighborhood, while continuing its own retail business, also operates as a wholesaler to serve other micro‐retailers in the neighborhood. A major obstacle for the transition from the informal strategy to the hybrid strategy is that the micro‐retailers are reluctant to source from a wholesaler who also competes with them in the retail market. Thus, it is not clear when the micro‐retailers adopt the hybrid strategy instead of the informal strategy. Meanwhile, the micro‐retailers may prefer the “formal” strategy: a traditional replenishment strategy under which one of the micro‐retailers relinquishes its retail business and operates purely as a wholesaler. We examine a situation when competing micro‐retailers contemplate with the three potential aforementioned replenishment strategies. Our equilibrium analysis of the two‐store model reveals that the dominant strategy is: (a) the hybrid strategy when the travel cost is high; (b) the formal strategy when the travel cost is medium; and (c) the informal strategy when the travel cost is low. This key insight is shown continue to hold when we extend the two‐store model to incorporate other issues including: quantity discounts from the supplier, variable operating costs, price competition, local monopolies, and different decision sequences. One additional finding is that the transition from the informal strategy to the hybrid strategy could benefit consumers if the micro‐retailers receive quantity discounts from the supplier. Furthermore, when there are more than two stores, we show that the formal strategy is never dominant. Moreover, when the number of stores increases, the hybrid strategy becomes more preferable to the informal strategy.     

Point‐of‐Use Hybrid Inventory Policy for Hospitals

Modern point‐of‐use technology at hospitals has enabled new replenishment policies for medical supplies. One of these new policies, which we call the hybrid policy, is currently in use at a large U.S. Midwest hospital. The hybrid policy combines a low‐cost periodic replenishment epoch with a high‐cost continuous replenishment option to avoid costly stockouts. We study this new hybrid policy under deterministic and stochastic demand. We develop a parameter search engine using simulation to optimize the long‐run average cost per unit time and, via a computational study, we provide insights on the benefits (reduction in cost, inventory, and number of replenishments) that hospitals may obtain by using the hybrid policy instead of the commonly used periodic policies. We also use the optimal hybrid policy parameters from the deterministic analysis to propose approximate expressions for the stochastic hybrid policy parameters that can be easily used by hospital management.      

Contingency Strategies in Managing Supply Systems with Uncertain Lead‐Times

The globalization of markets and geographic dispersion of production facilities, combined with a heavy outsourcing of supply chain processes, have substantially increased the exposure of supply chains to supply lead‐times of long and uncertain nature. In this paper, we study the potential use of two contingency strategies on top of the conventionally used time buffer—statically planned safety lead‐time (SL)—approach to deal with the lead‐time uncertainty. These are (1) the ex‐ante planning for disruption safety stock (DSS) to be released when a “disruption” (in this case, late delivery of the order) occurs; and (2) the ex‐post dynamic emergency response (DER), which dynamically decides on the timing and size of an emergency order to be placed. Our work elaborates on the optimal parameter setting for these strategies, compares their added values when used to complement the traditional SL approach, and examines how the use of the contingency strategies affects the SL and corresponding cycle length of a periodic review system. Our research finds that: (1) the above contingency strategies reduce the reliance on the SL and are cost effective when the coefficient of variation (CV) of the uncertain lead‐time is high; (2) it is important to re‐optimize the SL to account for the contingency plans; and (3) re‐optimization of the cycle length to account for the presence of the contingency responses, as opposed to using an EOQ‐determined cycle length, does not significantly improve the cost performance. However, such re‐optimization does well in the SL approach when the CV of the uncertain lead‐time is high.     

Regional Headquarter’s Dual Agency Role: Micro‐political Strategies of Alignment and Self‐interest

The increased research focus on the networked perspective of the multinational enterprise (MNE) reflects a greater delegation of responsibility from corporate headquarters (CHQ) to subsidiary and intermediary units such as regional headquarters (RHQ). This shift has increased the intensity of political interactions between key actors within the MNE. Despite the recent rise in studies on the micro‐political perspective of the MNE to date, little empirical work has explored this issue in the context of the CHQ–RHQ relationship. Drawing insights from agency theory and micro‐politics, the authors focus on the context in which RHQs develop micro‐political strategies in order to manage the flow and exchange of knowledge with CHQ. They show how RHQ may exhibit a ‘dual agency’ role when dealing with CHQ, in that it is characterized as a principal and agent, each requiring different micro‐political knowledge strategies. As a principal, RHQ will develop micro‐political knowledge strategies to increase alignment with CHQ. As an agent, RHQ develops micro‐political knowledge strategies to pursue its self‐interests. Having identified different RHQ agency roles, the authors develop a conceptual model that outlines how alignment and self‐interest‐seeking behaviours from RHQ are manifest through different micro‐political knowledge strategies in its agency relationship with CHQ.     

SHORT‐TERM E‐PROCUREMENT STRATEGIES VERSUS LONG‐TERM CONTRACTS

In this paper we compare the following procurement strategies based on their expected costs: strategic partnership, which is based on a long‐term relationship with a single supplier; online search, which is a short‐term strategy; and a combined strategy, which is some combination of the first two strategies. In addition, we determine for the online search and combined strategy the optimal number of suppliers to contact for a price quote, and analyze how it depends on the various cost and demand parameters. The main contribution of this paper is that it does not assume a single procurement strategy, but rather compares three alternatives.     

Integrating a Top‐Down and a Bottom‐Up Approach: Formal and Informal Risk‐Handling Strategies in a Utility Company

In this study, we bring together a top‐down and a bottom‐up approach of risk handling. We do so by conceptualizing and qualitatively and quantitatively measuring formal and informal risk‐handling strategies in a Dutch utility company. We conceive of formal risk handling as regulating, training, and educating safety and enforcing rule compliance, while we distinguish three different informal risk‐handling strategies: discretionary specialization, tacit knowledge, and taking personal responsibility. We show that the formal risk‐handling strategy and the three informal risk‐handling strategies can be measured separately. Hence, we have validated the measurement of all four strategies derived from two different risk‐handling approaches. Moreover, we have demonstrated that the perceived use of the four strategies has different effects on unsafe behavior: formal risk handling and tacit knowledge decrease it, discretion increases it, and taking personal responsibility has no effect on unsafe behavior.     

Workforce‐constrained Preventive Maintenance Scheduling Using Evolution Strategies

Heavy equipment overhaul facilities such as aircraft service centers and railroad yards face the challenge of minimizing the makespan for a set of preventive maintenance (PM) tasks, requiring single or multiple skills, within workforce availability constraints. In this paper, we examine the utility of evolution strategies to this problem. Comparison of the computational efforts of evolution strategies with exhaustive enumeration to reach optimal solutions for 60 small problems illustrates the ability of evolution strategies to yield optimal solutions increasingly efficiently with increasing problem size. A set of 852 large‐scale problems was solved using evolution strategies to examine the effects of task‐related problem characteristics, workforce‐related variables, and evolution strategies population size (μ) on CPU time. The results empirically supported practical utility of evolution strategies to solve large‐scale, complex preventive maintenance problems involving single‐ and multiple‐skilled workforce. Finally, comparison of evolution strategies and simulated annealing for the 852 experiments indicated much faster convergence to optimality with evolution strategies.     

Equilibrium Joining Strategies and Optimal Control of a Make‐to‐Stock Queue

We consider a make‐to‐stock, finite‐capacity production system with setup cost and delay‐sensitive customers. To balance the setup and inventory related costs, the production manager adopts a two‐critical‐number control policy, where the production starts when the number of waiting customers reaches a certain level and shuts down when a certain quantity of inventory has accumulated. Once the production is set up, the unit production time follows an exponential distribution. Potential customers arrive according to a Poisson process. Customers are strategic, i.e., they make decisions on whether to stay for the product or to leave without purchase based on their utility values, which depend on the production manager's control decisions. We formulate the problem as a Stackelberg game between the production manager and the customers, where the former is the game leader. We first derive the equilibrium customer purchasing strategy and system performance. We then formulate the expected cost rate function for the production system and present a search algorithm for obtaining the optimal values of the two control variables. We further analyze the characteristics of the optimal solution numerically and compare them with the situation where the customers are non‐strategic.     

Product Positioning in a Two‐Dimensional Market Space

This paper examines the optimal product portfolio positioning for a monopolist firm in a market where consumers exhibit vertical differentiation for product performance and horizontal differentiation for product feature. Our key results are as follows: (i) Variable costs drive vertical differentiation. In the presence of significant volume‐dependent manufacturing costs, the optimal portfolio contains a mix of vertically and horizontally differentiated products and an increase in the variable cost makes adding vertically differentiated products relatively more profitable; if fixed volume‐independent design costs dominate, the portfolio exhibits solely horizontal differentiation. (ii) Horizontal differentiation is the main profit lever, and vertical differentiation brings only a marginal benefit; this is true even when most of the consumers exhibit low willingness to pay for performance, which is often used as an excuse to offer low‐end products. (iii) There are more low‐quality products than high‐quality ones, and market coverage increases when the willingness to pay for performance increases. In summary, the model shows how portfolio composition decisions depend on the product cost structure and the consumer preferences.     

Analyzing the Efficient Execution of In‐Store Logistics Processes in Grocery Retailing—The Case of Dairy Products

In this article, we examine in‐store logistics processes for handling dairy products, from the incoming dock to the shelves of supermarkets and hypermarkets. The efficient execution of the in‐store logistics related to such fast‐moving, sensitive, and essential items is challenging and crucial for grocery retailers' sales, profits, and image. In our empirical study, we survey in‐store logistics processes in 202 grocery supermarkets and hypermarkets belonging to a major retail chain in central Europe. Using a data envelopment analysis (DEA) and simulation, we facilitate process benchmarking. In particular, we identify ways of improving in‐store logistics processes by showing the performance impacts of different managerial strategies and tactics. The DEA results indicate different efficiency levels for different store formats; the hybrid store format of the small hypermarket exhibits a comparatively worse performance in the analyzed execution of in‐store logistics processes. The process simulation analysis reveals that the strategic and tactical design of in‐store logistics processes (such as store locations/layouts, capacity management, reorder time, order period, and safety stock factors) lead to substantial service performance improvements (such as higher on‐shelf availability combined with reduced inventory obsolescence costs). The results also show marginal improvements in the performance figures when delivery delays and damage to products are reduced.     

An Exploratory Study of Procurement Strategies for Multi‐Item RFQs in B2B Markets: Antecedents and Impact on Performance

This research explores procurement strategies for multi‐item requests for quotation (RFQs) in business‐to‐business (B2B) markets using responses from 825 purchasing professionals. The study first establishes procurement strategies that differ based on their level of strategic emphasis, i.e., the importance that is placed on the pursuit of four strategic objectives. Underlying objectives, which are obtained via factor analysis, include the focus on price, security of supply, internal procurement efficiencies, and bundle building. Next, cluster analysis is used to derive prototypical strategic approaches. The three cluster groups that emerge possess the same relative ranking of the four objectives, but differ based on the intensity with which these objectives are pursued. The clusters are labelled as the three strategic groups of strategists, opportunists, and responders. The research then explores, using an industrial buyer behavior lens, the impact of environmental antecedents in determining a particular strategy. Environmental variables include purchase importance, market uncertainty, supply base availability, buyer bargaining power, item experience, and supply base experience. Finally, the study tests the impact of procurement strategy on the buyer's perceived performance, suggesting that strategists, placing more emphasis on the pursuit of strategic sourcing objectives, achieve better performance than opportunists and responders.     

Risk of Large‐Scale Evacuation Based on the Effectiveness of Rescue Strategies Under Different Crowd Densities

Crowd density is a key factor that influences the moving characteristics of a large group of people during a large‐scale evacuation. In this article, the macro features of crowd flow and subsequent rescue strategies were considered, and a series of characteristic crowd densities that affect large‐scale people movement, as well as the maximum bearing density when the crowd is extremely congested, were analyzed. On the basis of characteristic crowd densities, the queuing theory was applied to simulate crowd movement. Accordingly, the moving characteristics of the crowd and the effects of typical crowd density—which is viewed as the representation of the crowd's arrival intensity in front of the evacuation passageways—on rescue strategies was studied. Furthermore, a “risk axle of crowd density” is proposed to determine the efficiency of rescue strategies in a large‐scale evacuation, i.e., whether the rescue strategies are able to effectively maintain or improve evacuation efficiency. Finally, through some rational hypotheses for the value of evacuation risk, a three‐dimensional distribution of the evacuation risk is established to illustrate the risk axle of crowd density. This work aims to make some macro, but original, analysis on the risk of large‐scale crowd evacuation from the perspective of the efficiency of rescue strategies.     

The Applicability of Porter’s Generic Strategies in the Digital Age: Assumptions, Conjectures, and Suggestions

Because current management theories evolved in the context of brick-and-mortar firms, this paper examines three key questions raised by the advent of e-business: (1) Will the strategy types found among e-business firms resemble Porter’s (1980) generic strategies? (2) Will we find performance differences among e-business firms pursuing different types of strategies? (3) Will we find differences in the strategy-performance relationships of pure online firms (pure plays) and firms with both online and offline operations (clicks-and-bricks)? We conclude that integrated strategies that combine elements of cost leadership and differentiation will outperform cost leadership or differentiation strategies. We also argue that, regardless of business strategy type, clicks-and-bricks firms that closely integrate their on- and offline operations will enjoy performance advantages over their pure play counterparts.     

Single‐ and Multiple‐Informant Research Designs to Examine the Human Resource Management−Performance Relationship

During the last decades, many empirical studies have analysed the relationship between human resource management and firm performance. Despite the call for multiple‐rater designs, a relatively large number of researchers still rely on survey responses provided by a single informant in each organization. Single‐informant designs suffer from a number of problems, especially when the responses provided by different types of raters across firms are pooled into a single dataset prior to assessing their equivalence across raters. Using an illustration of the relationship between high performance work systems and firm performance, in this paper we observe that responses provided by managers holding different positions (human resource managers and sales managers) differ significantly and therefore pooling their responses into a single dataset may result in confusing conclusions. Furthermore, we demonstrate that differences arise in the estimated parameters when a multiple‐key‐informant approach, compared to a single‐informant design, is adopted. For these reasons, data collection using multiple key informants is recommended, based on the assumption that some raters in the firm will be more knowledgeable about the variables of interest than others.     

Generic Strategies and Business Performance: an Empirical Study of the Screw Machine Products Industry

Select businesses in industry may attempt to compete through distinct strategies. But some may be successful in adopting distinct strategic profiles while others may not prove successful. In this study it was expected that six different groups of businesses might be present in the empirical exploration – those competing successfully with the low cost strategy and those competing unsuccessfully with this strategy; those competing successfully with the differentiation strategy and those competing unsuccessfully with this strategy; and those competing successfully with low cost and differentiation strategies and those competing unsuccessfully with these strategies. The results of the investigation portray the presence of three strategic profiles. They are unsuccessful low cost businesses with the lowest performance, unsuccessful differentiated businesses with the second lowest performance, and successful businesses with combination strategies with the highest performance.     

Managing Differentiation‐Integration Duality in Supply Chain Integration*

Existing research focuses on the positive returns to operational performance of firms’ supply chain integration (SCI) with suppliers, buyers, and customers. We draw on differentiation‐integration duality and contingency theory to suggest that manufacturing firms should seek to achieve both integration through supply chain coordination activities and differentiation through modularity‐based manufacturing practices (MBMP). Using a sample of 261 manufacturing firms, we identify an inverse U‐shaped relationship between SCI and operational performance. Furthermore, we find support for the importance of differentiation‐integration duality as a fit between high levels of SCI and high levels of MBMP results in enhanced operational performance. We find support for a contingency perspective as fit is especially critical at higher levels of environmental uncertainty. Implications for theory, practice, and further research are suggested.     

Emergent Marketing Strategies and Performance: The Effects of Market Uncertainty and Strategic Feedback Systems

Although many process‐based studies appear in the strategic management literature, little attention has been devoted to the formation process of marketing strategies. Drawing on enactment and information‐processing theories, this study views the external environment as a source of information (i.e. enacted) and organizations as information‐processing entities. We propose a conceptual framework of antecedents and market performance consequences of emergent marketing strategies and test it with a sample of 214 UK enterprises. The results suggest that dimensions of market uncertainty (i.e. dynamism and complexity) and strategic feedback systems influence the formation of emergent marketing strategy. Furthermore, the data reveal that market uncertainty aspects condition the association between emergent marketing strategies and market performance in different ways. These findings provide new insights into how emergent marketing strategies evolve and influence organizational outcomes.     

The Effectiveness of Management‐By‐Walking‐Around: A Randomized Field Study

Management‐by‐walking‐around (MBWA) is a widely adopted technique in hospitals that involves senior managers directly observing frontline work. However, few studies have rigorously examined its impact on organizational outcomes. This study examines an improvement program based on MBWA in which senior managers observe frontline employees, solicit ideas about improvement opportunities, and work with staff to resolve the issues. We randomly selected hospitals to implement the 18‐month‐long, MBWA‐based improvement program; 56 work areas participated. We find that the program, on average, had a negative impact on performance. To explain this surprising finding, we use mixed methods to examine the impact of the work area's problem‐solving approach. Results suggest that prioritizing easy‐to‐solve problems was associated with improved performance. We believe this was because it resulted in greater action‐taking. A different approach was characterized by prioritizing high‐value problems, which was not successful in our study. We also find that assigning to senior managers responsibility for ensuring that identified problems get resolved resulted in better performance. Overall, our study suggests that senior managers' physical presence in their organizations' front lines was not helpful unless it enabled active problem solving.     

Profitability of Service‐Level‐Based Price Differentiation with Inventory Rationing

In this paper, we study the profitability of service‐level‐based price differentiation (SLBPD) in an inventory‐rationing context. SLBPD implies that a company offers several combinations of prices and guaranteed service levels, from which customers self‐select; different customers choose different offerings because they incur different shortage costs if an order is not fulfilled immediately. We develop an analytical model for SLBPD and explore if and when such a service differentiation strategy yields higher profits than a single undifferentiated offering. The results of our analyses suggest that SLBPD is profitable only if a company faces pricing restrictions, e.g., because of competitive pressure or regulatory restrictions. We develop necessary and sufficient conditions under which a specific and relevant form of SLBPD (called “service‐level‐based upselling”) is profitable, and provide an algorithm to compute the optimal parameters of such a policy. Based on this algorithm we carry out numerical analyses that allow us to characterize the profit increment of service‐level‐based upselling. We derive managerial insights into the attractiveness of SLBPD and explain how our basic analytical framework can be extended to account for more complex practical features.