Supply chain management in LSRT industry: Differences between theory and practice

The large scale-retail trade (LSRT) is an industry worth over 80 billion euro in 2017 only considering the turnover of the eight major Italian groups. However, such high levels of turnover are typically characterized by very low margins. Therefore, more than in other industries, companies here strive for process efficiency and cost reduction. From an academic view, literature is plenty of theoretical contributions addressing optimization in operations, logistics, distribution and warehousing processes. However, because of the LSRT industry historical evolution, most attention is traditionally devoted to commercial policies rather than engineering methods, and best practices in these areas are uncommon. On top of this, LSRT company supply chain processes are extremely complex, due to a number of peculiarities, mainly originating from the vast variety of products along with their assorted characteristic. Indeed, traditional supply chain mathematical approaches always require significant simplifying assumptions or hypotheses when approaching LSRT company problems; this often impede the practical applicability of the proposed optimization models. The aim of this paper is investigating if and how the main Operations & Supply Chain Management (O&SC) approaches and techniques in scientific literature can be actually applied in the LSRT industry. This is reached through an extensive review of all the simplification and assumptions hypothesized in the theoretical models in literature, and the relative weighting of their criticality, achieved through a survey to managers of two major LSRT Italian companies. The results show which simplification and assumptions shall be accepted to apply a model or technique to the specific industry, and which are unacceptable or too simplistic. This evidence may help academics in the development of studies and researches to address real and practical issues in the LSRT industry, while also providing a support to LSRT companies managers in the decision to exploit a certain analytical model or technique for their case.