Execution Failures in Retail Supply Chains - A Virtual Reality Experiment
45 Pages Posted: 20 Oct 2015 Last revised: 31 Aug 2018
Date Written: August 30, 2018
We conduct a real-effort experiment in an immersive virtual environment and quantify the impact of product similarity on operational execution in a retail setting. In our experiments, subjects must identify and sort two types of products based on their observable characteristics. We find measures of operational execution to be substantially lower when the observable characteristics of the two products types are very similar compared to when they are dissimilar. Specifically, we observe more sorting errors and more products left unsorted when subjects handle products with more similar observable characteristics. Introducing a visual cue to distinguish products improves execution when the products are dissimilar (by lowering the frequency of sorting mistakes) and, even more so, when they are similar (by reducing both the number of sorting mistakes and the number of products left unsorted). Overall performance (measured by the faction of products correctly sorted) increases by approximately 22 percent, on average, when subjects handle products with observable characteristics that are easier to distinguish. Using three-dimensional real-time movement measurements of our subjects, we discuss differences among high- and low-performing subjects as well as the managerial implications of our findings for product design, packaging, and labeling on execution performance in the retail context.
Keywords: inventory inaccuracy; retail supply chain; variety; order picking; human error
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