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Campbell Soup'S Continuous Replenishment Program: Evaluation And Enhanced Inventory Decision Rules

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  • GfiRARD CACHON
  • MARSHALL FISHER

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 improvementreduces a retailer's cost of goods sold by 1.2%, which is significant in the low profitmargin grocery industry. Furthermore, these savings could have been achieved without VMI.

Suggested Citation

  • GfiRARD CACHON & MARSHALL FISHER, 1997. "Campbell Soup'S Continuous Replenishment Program: Evaluation And Enhanced Inventory Decision Rules," Production and Operations Management, Production and Operations Management Society, vol. 6(3), pages 266-276, September.
  • Handle: RePEc:bla:popmgt:v:6:y:1997:i:3:p:266-276
    DOI: 10.1111/j.1937-5956.1997.tb00430.x
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    Cited by:

    1. Ciancimino, Elena & Cannella, Salvatore & Canca Ortiz, José David & Framiñán Torres, José Manuel, 2009. "Análisis multinivel de cadenas de suministros: dos técnicas de resolución del efecto bullwhip // Supply Chain Multi-level Analysis: Two Bullwhip Dampening Approaches," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 8(1), pages 7-28, December.
    2. Roberto Dominguez & Salvatore Cannella & Borja Ponte & Jose M. Framinan, 2022. "Information sharing in decentralised supply chains with partial collaboration," Flexible Services and Manufacturing Journal, Springer, vol. 34(2), pages 263-292, June.
    3. Fawcett, Stanley E. & Magnan, Gregory M. & McCarter, Matthew W., 2005. "The Effect of People on the Supply Chain World: Some Overlooked Issues," Working Papers 05-0118, University of Illinois at Urbana-Champaign, College of Business.
    4. Baruah, Pundarikaksha, 2006. "Supply Chains Facing Atypical Demand: Optimal Operational Policies And Benefits Under Information Sharing," MPRA Paper 16101, University Library of Munich, Germany.
    5. Nalini Govindarajulu, 2006. "Application of Demand Chain Initiatives to Small Businesses:," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 15(1), pages 19-35, January.
    6. Varun Karamshetty & Harwin De Vries & Luk N. Van Wassenhove & Sarah Dewilde & Warnyta Minnaard & Dennis Ongarora & Kennedy Abuga & Prashant Yadav, 2022. "Inventory Management Practices in Private Healthcare Facilities in Nairobi County," Production and Operations Management, Production and Operations Management Society, vol. 31(2), pages 828-846, February.
    7. Emel Aktas & Yuwei Meng, 2017. "An Exploration of Big Data Practices in Retail Sector," Logistics, MDPI, vol. 1(2), pages 1-28, December.

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