Evolutions of Omni-Channel Fulfillment Performance: An In-Depth Case Study in Grocery Retailing

Abstract

The rapid adoption of omni-channel strategies has prompted grocery retailers to reconfigure their back-end fulfillment operations to efficiently and effectively meet the demands of online and offline retail channels. Viewing back-end fulfillment operations in omni-channel grocery retail as a complex adaptive system, we present an eight-year multi-method case study of the UK operations of a leading global grocery retailer. Over this period the share of online sales significantly grew as proportion of overall sales. We observe four evolutions in the back-end fulfillment complex adaptive system to respond to the operational demands associated with increasing online sales. Complex adaptive systems theory suggests that such evolutions should eventually lead to a state of equilibrium, where the system is reconfigured to effectively and efficiently respond to the market. However, we observe that this equilibrium was never achieved and propose this results from two opposing and irreconcilable environmental energies preventing optimal adaptation. Drawing on both in-depth interviews and a proprietary fulfillment dataset from the organization, we expose the implications of conflicting energies being imported from the environment, and propose three strategies, drawn from paradox theory, for reconciling these energies within a complex adaptive system.