Exploring the Connections between Backrooms, Inventory Record Inaccuracies, and Waste

Abstract

This paper explores the impact of retail store backrooms on inventory record inaccuracies (IRI) and waste. A trend in the retail industry is operating in the absence of a backroom. Benefits of operating without a backroom can include more employee presence on the sales floor, quicker replenishment (or the elimination of traditional backroom to shelf replenishment entirely), lower on-hand inventory, and the reduction of waste in the form of time, labor, cashflow, and product obsolescence. By conducting a literature review of the published literature on retail backrooms, this paper explores two additional unstated benefits to retailers operating without a backroom; specifically, the reduction of IRI and waste—an angle that has been previously understudied in the current academic literature. The objectives of this paper include defining a link between the existence of a backroom and waste/IRI, presenting an opportunity for future research in this area of study, and providing practical advice for corporations that wish to operate with or without a backroom.