The SCM capstone Fresher Food Supply: Evaluating the Impact of Pick-to-Zero Strategy on Freshness of Produce Using Discrete Event Simulations was authored by Kalyan Simha and Shantanu Baviskar and supervised by Dr. Christopher Mejía Argueta (cmejia@mit.edu) and Eva Ponce (eponce@mit.edu). For more information on this research, please contact the thesis supervisors.
Inventory holding and management constitute the cornerstone of every retailer’s business operation. Retailers derive significant advantages from maintaining inventories due to economies of scale. However, these benefits may not extend to perishable goods, as holding inventory can result in the aging of products and reduced freshness. Freshness is a critical factor in a consumer’s purchasing decision; many shoppers actively reach for the back of supermarket shelves to purchase the freshest products. Hence, improving the freshness of products can help grocery retailers not only retain customers but also develop a competitive edge in the market.
Our research seeks to help grocery retailers improve the freshness of products by quantifying freshness and implementing a pick-to-zero operation. So, what is pick-to-zero? A pick-to-zero strategy is an order-picking method where shipments are received, put away, picked, and shipped out on the same day. Doing so reduces the inventory holding time which increases the freshness of products. The fundamental question we explored in our research is whether pick-to-zero can improve freshness while avoiding incremental operational costs.
We compared current processes with pick-to-zero using three key metrics: freshness, cost, and excess inventory. Freshness was measured as “speed to the consumer,” while costs were divided into operational, and logistical, to assess the impact of process changes. The faster the products reach the end consumers, the fresher the products.
For more about this capstone project, and to see the full results of this research, visit the Supply Chain Management Review online at SCMR.com.
Overview of Results
The results were analyzed using two critical scenarios: (1) Maximum possible freshness achieved using pick-to-zero and daily shipments inbound from suppliers and outbound to stores and (2) impact on freshness by using a consolidation center upstream to mitigate increased costs due to daily shipments and under-utilized capacity of trucks.
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