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Supply chain collaboration between retailers and suppliers is very important. If the

business is lack of collaboration between partners, the industry as whole needs to

improve its levels of collaboration to better address on-shelf availability in the future.

According to Chopra and Meindl (2007), on-shelf availability is a situation in

which an item is available for sales on shelf when a customer enters the store to

purchase it. On-shelf availability required getting the right product to the customer at

the right time. This is a critical factor in the retail world, and impacts retailers' revenues

and profitability. Besides that, on-shelf availability of goods is a primary objective of

retailers, who play a vital gate-keeping role in product supply chains. Fernie and Grant

(2008) added that on-shelf availability helps retailers enjoy store loyalty when

customers experience reliable supply of stock on the display shelves.

Maintaining on-shelf availability implies preventing out-of-stock occurrences.

Out-of-stock occurred when customers fail to locate the desired product in the store

(Gruen and Corsten, 2007). It occurred in the case of fast moving and promotional items.

These situations can be traced back to inadequate information sharing among

stakeholders. It suggests effective distribution channel management where stocks are

continuously available at the retail stores (Kucuk, 2004) as well as good in-store

practices that result in satisfactory customer service (Schary and Christopher, 1979).

The effectively of on-shelf availability depends on how efficiently retailers

manage some of the top supply chain challenges in the areas of inventory reduction, and

warehouse and transportation efficiency. Retailers must clearly identify the root cause

of out-of-stock scenarios and understand what the impact could collaboration in supply

chain haves in the field of transportation and also warehousing in improving on-shelf

availability.

From a retailer’s perspective, logistics means the successful management of the

costs of transportation, handling and storage, whilst ensuring high on-shelf availability

(Fernie & Sparks, 2009). This is typically accomplished through collaboration and

integration across functions in the supply chain, from the supplier, via central

warehouse and further on to the store and the shelf. In many of the companies there is

not one department that has the entire control of all activities in this critical process.

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The central warehouse is normally responsible for the inventory carrying costs and the

handling costs in the central warehouse, and manages the physical picking, packing and

transportation to the store, the responsibility for call-offs and decisions concerning

order quantities could be managed by the stores individually, or by a sales department

centrally.

The logistics transformation derives from cost and service requirements as well

as consumer and retailer change (Fernie and Sparks, 1998). If the element of logistic is

not controlled effectively, it can be remarkably expensive. Holding stock or inventory in

warehouses just in case it is needed is a highly costly activity. The stock itself is

expensive and might not sell or could become obsolete. Warehouses and distribution

centres generally are expensive to build, operate and maintain. Vehicles to transport

goods between warehouses and shops are expensive, in terms of both capital and

running costs. There is thus a cost imperative to making sure that logistics is carried out

effectively and efficiently, through the most appropriate allocation of resources along

the supply chain.

At the same time, there can be service benefits. By appropriate integration of

demand and supply, mainly through the widespread use of information technology,

retailers can provide a better service to consumers by, for example, having fresher,

higher quality produce arriving to meet consumer demand for such products. With the

appropriate logistics, products should be of a better presentational quality, could

possibly be cheaper, have a longer shelf life and there should be far fewer instances of

stock outs. Reaction time to spurts in demand can be radically improved through the use

of information transmission and dissemination technologies. If operating properly, a

good logistics system can therefore both reduce costs and improve service, providing a

competitive advantage for the retailer.

In conclusion, retailers and other players in the value chain are now devoting

greater resources and efforts to manage on-shelf availability. They are also increasingly

acknowledging the need for collaboration with supply chain partners to improve on-

shelf availability, and thereby increase revenues and sustain customer loyalty. Retailers,

manufacturers, and supply chain partners that embrace an integrated, cross-industry

approach can address the challenges impacting on-shelf availability effectively.