Lateral inventory share-based models for IoT-enabled E-commerce sustainable food supply networks

• Published in: Computers & operations research 2021-06, Vol.130, p.105237, Article 105237
• Main Authors: Ekren, Banu Yetkin, Mangla, Sachin Kumar, Turhanlar, Ecem Eroglu, Kazancoglu, Yigit, Li, Guo
• Format: Article
• Language: English
• Subjects: B2B; Drought; e-Grocery; Electronic commerce; Food; Food supply; Food waste; Groceries; Industry 4.0; Internet of Things; Lateral-inventory; Natural disasters; Networks; Operations research; Optimization; Policies; Profitability; Strategic management; Supply chains; Sustainable food supply chain network
• ISSN: 0305-0548; 1873-765X; 0305-0548
• DOI: 10.1016/j.cor.2021.105237

•In Covid-19, managing e-commerce with safe food supply has become crucial.•Lateral inventory share-based control system is designed for e-grocery in an IoT environment.•B2B policies are monitored/controlled to optimise the businesses sustainability by minimising overall food waste.•Lateral inventory share policy improves the network at a significant level.•At the optimal points of the considered policies, lateral inventory share ratio is observed as larger than 50 This research investigates lateral inventory share-based business models for e-grocery networks where online groceries are inter-connected in an Internet of Things (IoT) environment. Recently, managing food supplies has become a very important issue due to the onset of unexpected conditions such as natural disasters (earthquakes, tsunamis, floods, droughts etc.) and pandemics. In this paper, we aim to design sustainable food supply chain networks for e-commerce food companies (e.g. e-groceries) by applying lateral inventory share policies after the consideration of the existence of strategic alliances between organizations. We aim to minimize food waste as well as back orders resulting in more sustainable networks. Further, we explore how a business-to-business (B2B) policy (i.e. lateral-inventory share policy) should be designed to optimize business (i.e. e-groceries) profitability. We optimize the re-order and up-to (s,S) inventory levels of e-groceries for the pre-defined sharing policies by using a simulation optimization approach. The optimal results show that having a lateral inventory share poliIndiacy in food networks is more efficient compared to a non-lateral policy. Also, at the optimal points of the considered policies, lateral inventory share ratio is usually observed to be larger than 50% on average, meaning that more than half of customer orders are met by lateral inventory share.