Execution Failures in Retail Supply Chains - A Virtual Reality Experiment

41 Pages Posted: 20 Oct 2015 Last revised: 9 Sep 2020

See all articles by Nicole DeHoratius

Nicole DeHoratius

University of Chicago - Booth School of Business

Özgür Gürerk

University of Erfurt - Economics, Law, and Social Sciences

Dorothee Honhon

University of Texas at Dallas

Kyle B. Hyndman

University of Texas at Dallas

Date Written: September 8, 2020

Abstract

Problem definition: Increasingly, retail store employees find themselves being asked to pick orders from inventory. These tasks are performed under intense conditions and, in many cases, are made more difficult because of high product variety and high degrees of product similarity.

Academic/Practical relevance: It is important to provide quantifiable information about the impact of task complexity and task intensity on worker performance and understand how actions can boost productivity and reduce errors.

Methodology: We conduct a real-effort task in a virtual environment where subjects are to sort cubes into bins. We study task complexity by varying the degree of similarity between the cubes and task intensity by varying the arrival pace of the cube. Beyond traditional descriptive performance analysis we also analyze subjects' movements.

Results: Reducing task complexity by making the cubes more distinct increases productivity by as much as 38.2% and reduces the error rate by as much as 93.6%. It also induces subjects to move more efficiently. Increasing task intensity improves throughput but decrease accuracy slightly; also, varying task intensity appears to improve performance via faster learning. The highest performing subjects appear to be those who move the least and the most fluidly. Subjects have a higher tendency to cut corners when the task is more complex and/or more intense.

Managerial implications: Managers should trade off throughput vs accuracy based on the cost of errors in their business. By designing products in a way that takes retail execution into account, and specifically, reduces product similarity, substantial improvements in performance can be obtained. Managers should consider varying task intensity for their workers and training them to make fluid motions.

Keywords: inventory inaccuracy; retail supply chain; variety; order picking; human error

Suggested Citation

DeHoratius, Nicole and Gürerk, Özgür and Honhon, Dorothee and Hyndman, Kyle B., Execution Failures in Retail Supply Chains - A Virtual Reality Experiment (September 8, 2020). Chicago Booth Research Paper No. 15-47, Available at SSRN: https://ssrn.com/abstract=2676628 or http://dx.doi.org/10.2139/ssrn.2676628

Nicole DeHoratius (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Özgür Gürerk

University of Erfurt - Economics, Law, and Social Sciences ( email )

Nordhaeuser Str. 63
D - 99089 Erfurt
Germany

Dorothee Honhon

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States

Kyle B. Hyndman

University of Texas at Dallas ( email )

2601 North Floyd Road
P.O. Box 830688
Richardson, TX 75083
United States

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