Retail flexibility is the future

Retailers are the link between suppliers and consumers. And in order to keep their customers satisfied and loyal, retailers need to be increasingly flexible in their logistics activities and able to react quickly to changes in demand.

Hamid Jafari has written a doctoral thesis called Postponement and Logistics Flexibility in Retailing. He has taken several methodological approaches, to transfer knowledge from the practices that are traditionally used in manufacturing, to a retailing context.

“My study could help retailers to better design their supply chain and to see which activities could be delayed to meet the customers’ demand,” says Hamid.

Delaying, or postponement, is one way to be flexible. This can mean adjusting the price at the latest possible moment (for instance when a bus load of tourists roll in), ordering goods at the latest possible moment, or making a product at the latest possible moment.

“A big thing right now is customization. For instance, there is an online store that lets you build your own bike. There is no store and no inventory, because the bike is built after the customer places the order,” says Hamid. “This is interesting from both a retailer and a customer perspective. The retailer has reduced their cost, and the customer feels more involved in the process.“

But postponement is not always a good thing. For daily products like milk or other fast moving consumer goods, customers are usually not interested in being a part of the process; they just want to get their groceries. In those cases, knowing how much people usually buy is more useful.

Most retailers will use a mix of postponement: waiting for as long as possible in order to get better info, and speculation: using previous knowledge and forecasting. The thesis covers how a certain mix can lead to different performance outcomes and work for different types of retailers.

"One thing that would be interesting to study further is the implications for local and smaller stores," says Hamid. "They usually have close partnerships or even personal relationships with suppliers that are geographically close. How does that affect their flexibility?"

Hamid Jafari successfully defended his thesis in Business Administration on 11 December at Jönköping International Business School. External examiner at the defence was Professor Mats Abrahamsson, Linköping University. Examining committee was Professor Herbert Kotzab, Bremen University, Professor Per Andersson, Stockholm School of Economics, and Associate Professor Adele Berndt, JIBS. Chairperson was Professor Susanne Hertz, JIBS.

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Hamid Jafari