Development of a Classification Model for Value-Added and Non-Value-Added Operations in Retail Logistics: Insights from a Supermarket Case Study

Abstract

In the context of retail logistics, achieving operational efficiency and cost reductions requires distinguishing between value-added (VA) and non-value-added (NVA) activities. VA activities are those that bring products closer to their correct position on the shelf, with their price updated, guaranteeing their availability to customers. All other activities are considered as NVA activities. NVA activities include activities such as unnecessary handling, waiting, excessive movement, and stock mismanagement. This study is based on an on-site experience conducted in a Modelo supermarket, part of the Sonae group and one of Portugal’s largest retailers, which reinforces the practical significance of its findings. By analyzing various aspects of internal retail logistics, this research challenges traditional definitions of value and waste—typically applied in manufacturing—and proposes a new approach tailored to retail operations. Six specific types of NVA activities were identified in this context. Applying this classification model, a multi-moment analysis was conducted to quantify the labor utilization in VA tasks, offering insights into process inefficiencies. The proposed model provides a systematic framework for categorizing retail logistics operations, supporting decision-makers in streamlining workflows, improving productivity, and optimizing resource allocation. Beyond academic discourse, this model serves as a practical tool for retailers aiming to enhance their internal logistics efficiency.

1. Introduction

In the contemporary landscape of rapid business dynamics, the efficiency of logistics operations has emerged as a cornerstone of competitiveness, especially within the retail sector. For retailers to stay competitive, they must efficiently manage the movement of goods from suppliers to store shelves and, ultimately, to customers.

In the context of lean philosophy, which inherently emphasizes the relentless pursuit of efficiency and value, the concept of waste serves as a critical lens through which the performance of operational processes is investigated. Traditionally, waste (originally “muda” in Japanese) is meticulously categorized into seven distinct forms: overproduction, waiting, transportation, over-processing, inventory, motion, and defects [1,2]. The principles and concepts typically associated with the lean philosophy and, obviously, its origin, the TPS, can undoubtedly be applied in retail since they are aligned with the elimination of waste and streamline operations [2,3]. However, when adapted to the specific context of a retail company’s internal logistics, this classification encounters difficulties in comprehensively capturing the true impact of each activity on customer value.

In the lean philosophy, value is defined as any action or process that directly transforms the product and contributes to satisfying the customer’s needs, and it is in this context that waste assessment gains importance [2]. The dynamic nature of internal logistics, intricately linked to the customer journey, necessitates a more refined understanding that goes beyond traditional categorizations, aligning with the core lean philosophy principle of maximizing value while minimizing waste.

Take, for instance, the classification of transportation as a non-value-added activity. In a broader business context, transportation might be viewed as a waste. However, in internal logistics, it paradoxically emerges as a vital component, ensuring the product’s timely and precise movement through the supply chain.

The distinction between activities that add value and activities that are considered wasteful is not a subject on which there is consensus, especially in the context of logistics. While, in our proposal, inventory is waste, another view may perceive it as a strategic necessity to meet fluctuating demands [4]. Having products readily available can enhance a retail store’s responsiveness and customer satisfaction, mitigating the risk of stockouts.

These nuanced perspectives challenge the conventional lean classification and underscore the need for a more refined understanding of waste in the context of internal logistics. To truly optimize these operations, it becomes imperative to distinguish between activities that genuinely contribute to waste and those that, in the complex nature of supply chain dynamics, play a vital role in maintaining the delicate balance between efficiency and responsiveness.

In the complicated journey from the supplier to the supermarket shelf, each step of the process may or may not add value. The classification model outlined in this article operates on the premise that a product positioned on a supermarket shelf holds greater value than one stored on a pallet within a warehouse. Moreover, it posits that, as a product moves closer to being displayed on the supermarket shelf, its value escalates accordingly. Value-added activities drive the product closer to its defined location on the shelf, enhancing its value, while non-value-added activities represent obstacles and detours that divert the product’s course rather than adding value to it. In the internal logistics operations of a retail company, the meticulous examination and optimization of these activities become indispensable.

To concretely apply the redefined perspectives on value and waste proposed herein within the field of internal logistics, this paper presents a practical exploration of a real-world scenario. This study will span the entire spectrum of internal logistics operations—from the reception of goods to the replenishment of products on the shelves of a retail supermarket situated in the north of Portugal. This comprehensive analysis will entail mapping out the process of, scrutinizing, and categorizing each operational activity, based on the understanding of value outlined in the proposed model.

As the supermarket’s internal logistics are investigated, this study aims to reevaluate and realign activities within the framework of a refined understanding of value creation and waste reduction. This case study will not only serve as a real demonstration of the previously supported paradigm change, but it will also provide significant insights into the retail landscape’s particular difficulties and potential. By systematically classifying activities, the goal of this work is to provide concrete guidelines that distinguish between essential tasks that elevate a product’s value and superfluous ones that hinder its seamless journey.

2. Literature Review

2.1. Lean Concepts and Its Types of Wastes

Toyota was facing serious difficulties when engineers Taiichi Ohno and Shigeo Shingo implemented management concepts on the factory floor that gave rise to the Toyota Production System (TPS). This new organizational model, which would later replace traditional American production systems, is based on the premise of “doing more with less” [1]. This premise argues that, with fewer resources (human and physical), less time, and less human effort, it is possible to eliminate waste and meet customer needs [3]. In 1990, the term “Lean” emerged in the West to refer to the Toyota Production System and the benefits of its implementation, following the publication of the book “The Machine That Changed the World” [3].

One of the essential starting points for lean thinking is value. In this context of thinking, value can only be defined by the end customer. Lean thinking must begin with a conscious attempt to precisely define value in terms of specific products with specific capabilities offered at specific prices through dialog with specific customers. To do this, it may be necessary to ignore existing assets and technologies and rethink processes in order to produce products with the focus on value recognized by customers.

According to Carreira [5], in lean environments, the following questions should be asked: “Does this activity directly contribute to making the customer’s product more complete?” “Does the customer pay for this activity to take place?” If the answer to either of these questions is “no”, the question can be asked: “why is this activity being carried out?”. This concept and definition of value lead us to two of the fundamental analytical terms of the lean concept, “adding value” and “not adding value”. An activity is considered to add value when that activity transforms the product, in the customer’s view, into a more complete state. The product has been physically altered, and its value to the customer has increased. On the other hand, an activity is considered not to add value when it consumes time (people, resources), materials, and/or space (facilities), does not change the product physically, or does not increase its value from the customer point of view; these activities are considered as waste.

Ohno [1] and Liker [6] define waste using seven categories, which refer to commonly wasted resources:

• Transportation (Transport): transporting materials, parts, or finished products into or out of a warehouse or between processes;
• Inventory: materials on hold, whether raw materials, work in progress, or finished products, cause delivery times to increase, obsolescence, damaged goods, and transportation and storage costs. In addition, extra inventory hides problems such as production losses, delays in supplier deliveries, defects, and equipment breakdowns.
• Movement: any wasted movement that a worker must perform during their working day. Workers must carry out during their working day, and walking to a piece of equipment, looking for something, or stacking parts, tools, etc., is waste.
• Waiting: workers serving only to watch a machine, waiting for the next step in a process, a tool, a supplier, etc., or simply not doing any work at all because of a lack of process delays, equipment breakdowns, or bottlenecks.
• Overproduction: producing more than is required by the next process, to produce a product before the required time, or to produce at a faster rate than necessary. This leads to overstaffing and storage and transportation costs due to inventorying because of excess stock.
• Incorrect or unnecessary processing (overprocessing): taking unnecessary steps to process parts. This includes inefficient processing due to poor tooling design, which causes unnecessary movement and producing defects. This waste is also generated when products are supplied with a higher quality than necessary.
• Defect: producing defective parts. Correction, repairing, reworking, scrapping, replacement production, and inspection mean wasted handling, time, and effort.

Later, when lean principles were disseminated in the West, an eighth waste was proposed by Liker [6], the “failure to use human potential”, although not everyone agrees on the need of this new type of waste and some only consider the seven original ones.

Identifying non-value-added activities and improving processes to reduce or eliminate them is a constant necessity across various economic sectors.. Klosova and Kozlovská [7] propose appropriate technologies and methods to identify non-value-adding activities in construction processes. Nassri et al. [8] identify, quantify, and categorize labor waste in housing construction. Park and Kim [9] present an interesting study on the identification of non-value-added activities during motor-vehicle stowage operations. An interesting discussion on the classification of value-adding and non-value-adding activities is presented by Shou et al. [10].

2.2. Lean Logistics and Its Types of Wastes

Lean logistics derives its fundamental principles from the Toyota Production System (TPS) and extends these principles throughout supply chains, encompassing activities that range from customer interactions to the procurement of raw materials [11]. It involves the systematic identification and elimination of non-value-added activities (waste) in the logistics process, including transportation, inventory management, warehousing, and order processing. Key principles include the continuous flow of materials and information, just-in-time deliveries, and the synchronization of supply chain activities. The incorporation of the lean manufacturing philosophy, which has been evolving over the years, has made the concept of lean logistics indispensable for businesses [11,12,13,14].

In the context of lean logistics, waste can be broadly classified into several categories, paralleling the traditional seven wastes of lean manufacturing, with a few additional ones that are pertinent to logistics. Sutherland and Bennett [15] define waste in logistics as follows:

Overproduction: occurs when products are supplied ahead of demand. Particularly detrimental to the entire supply chain is the surplus of demand information, known as “created demand” by Toyota. This surplus arises from requesting more than necessary or requesting it prematurely. Created demand typically inflates supply chain volume fluctuations at the part number level by around 40%.

Delay or waiting: refers to any period of time between the completion of one task and the commencement of the next. Instances of this may include the interval between a truck’s arrival for loading and the actual loading of its trailer, as well as the time lapse between receiving a customer’s order details and initiating the order fulfillment process.

Transportation or conveyance: pertains to the unnecessary movement of goods, leading to increased expenses. Instances of this include making stops that are outside of the designated route, excessive backtracking, and positioning high-demand inventory at the rear of a warehouse, all of which necessitate additional material handling distances.

Motion: refers to the superfluous actions of individuals, encompassing activities like walking, reaching, and stretching without necessity. Instances of this include excessive travel or reaching caused by inadequate storage organization or poorly designed ergonomic layouts in packaging workspaces.

Inventory: refers to any logistical operation leading to an excess of inventory or its placement in an inappropriate location. Instances of this include premature deliveries, receiving orders for quantities exceeding requirements, and inventory being misplaced in the wrong distribution center.

Space utilization: refers to the efficiency of space usage, which may fall below the optimal capacity. Examples of this include trailers not being loaded to their full capacity, cartons being underfilled, the inefficient organization of warehouse space, and even overloading beyond a space’s capacity.

Errors: encompasses any action leading to rework, unnecessary modifications, or returns. Instances of this include inaccuracies in billing, discrepancies in and adjustments of inventory, and issues with damaged, defective, incorrect, or mislabeled products.

On the other hand, the Kaizen Institute identifies, in their book Total Flow Management, the seven types of muda in distribution operations [16]: the muda of people waiting; muda of people movement (too much motions); muda of material movement (too much transportation); muda of material waiting (too much inventory); muda of over delivery (too much quantity); muda of over processing (difficulties); muda of errors and defects.

A more recent publication on lean logistics [17] categorizes the non-value-adding activities as: excess stock/inventory (overproduction from the supplier leading to accumulation of stocks deposited to the warehouse); transportation (unnecessary movement of products, workers and materials handling equipment operators); waiting time (workers waiting for products, machines or system); motion (unnecessary movement of the body by the operators when products are stored in ergonomically uncomfortable positions); overproduction (picking or preparation of unrequested orders); space/overprocessing (accumulation of unnecessary orders around the storage area as well as undue movement of products through the walk ways by more than one forklift); and defect/error (selection of the wrong item or quantity).

Some authors, following what was originally suggested by Onho [1], separate non-value-adding activities into two categories, non-value-added activities and necessary non-value-added activities. One example is a study of the supply chain of agricultural products [18]. A possible definition of necessary non-value-added activities is: “activities that create waste, but are needed to have in the production process such as the walking long distance to pick up raw material” [19].

Lean logistics represents an advanced skill set employed to design and oversee systems aimed at regulating the physical movement and positioning of raw materials, work-in-progress inventory, and finished goods, all while maintaining optimal service levels and minimizing costs [20,21]. In today’s business landscape, merely producing high-quality goods at competitive prices is not sufficient. There is a simultaneous need to ensure timely delivery to end-users and expand one’s market share, all of which hinges on efficient logistics management. In today’s fiercely competitive environment, efficient logistics operations are not just desirable—they are imperative [22,23].

2.3. Lean Retail and Its Types of Waste

Traditional lean thinking originates from manufacturing, where value is created by physically transforming raw materials into finished products. In this context, lean thinking aims to eliminate non-value-added activities (waste) and maximize efficiency in production. However, this definition of value does not fully align with retail logistics because logistics does not transform products—instead, it ensures their availability and efficient distribution. Unlike manufacturing, where value is linked to product transformation, retail logistics creates value by ensuring product availability at the right time and place. In a supermarket context, the goal is not to change the product but to efficiently offer a wide variety of goods, ensuring that they are stocked, accessible, and fresh for customers. This means that logistics itself does not add direct value, but it is essential to delivering value to the end consumer.

Several published studies present the use of lean concepts, principles, or tools in the retail sector. The oldest article found in the Scopus database is focused on the reduction of inventory [24], and since then many other studies have been published. The term “Lean retailing” initially emerged in association with Walmart’s early management practices and the adoption of information technology systems aimed at strengthening supplier relationships. The core objective of lean retailing is to ensure the efficient and rapid movement of goods to customers, facilitating swift shelf replenishment and enhancing point-of-sale effectiveness. Achieving this goal necessitates the ongoing identification and elimination of waste across all retail processes, from in-store operations to the broader aspects of the retail supply chain. This approach advocates for managing and continually improving retail value streams through “pull” replenishment strategies, which thereby ensures high levels of product availability [25].

The lean retailing concept is increasingly adopted by prominent retail companies, with giants such as Walmart and Tesco leading the way. These companies have exemplified how lean principles can elevate the level of service received by consumers while minimizing inventory and operational costs through improved supplier relations, distribution, and logistics processes. Another notable example is a Mercadona chain that centers its business model around customer-focused operations management principles aimed at eliminating non-value-adding activities. Similarly, lean principles have been successfully applied in other retail contexts, such as Seven-Eleven Japan, which saw enhanced service levels, increased sales, and reduced inventory through the application of integrated process improvements [26].

According to a study conducted by Jimenez et al. [27], according to the literature, the lean tools that are most commonly applied in retail and supply chain are JIT, VSM, 5S, Poka-Yoka, and Kaizen. Another similar study [28] found a larger set of tools being applied in the retail sector. According to the authors, the most popular tools are VSM and Lean Six Sigma, followed by lean thinking and lean production design, then lean supply chain, and finally Hoshin Kanri, Kaizen, and Kanban.

One interesting example is Amazon, where value stream mapping was applied to reduce non-value-adding activities [29]. In this study, the concept of necessary non-value-added activities was also included.

In lean retail, waste can be manifested in several ways, reflecting inefficiencies that retail operations often encounter [4]:

Inventory and stockouts: inventory waste is critical in retail, as both excess stock (leading to storage costs and product obsolescence) and stockouts (causing lost sales and customer dissatisfaction) directly impact profitability.

Waiting time: in retail logistics, this inefficiency is different from waiting time in manufacturing; it includes delays in replenishment, slow checkouts, and inefficiencies in restocking shelves.

Unnecessary movement: affects supermarket operations when employees and customers spend excessive time searching for products in storage or on shelves, walking long distances in poorly organized stockrooms, or handling items multiple times unnecessarily.

Over-processing: can refer to excessive packaging or pricing, unnecessary labeling, or redundant quality checks that do not add customer value.

Defects: defects in retail may not involve manufacturing defects, but this inefficiency includes pricing errors, mislabeled products, damaged goods, and inaccurate stock records that cause inefficiencies, affecting customer trust and operational efficiency.

Underutilized employees: failing to fully leverage employees’ skills and knowledge, resulting in lost opportunities for improving service and operations.

While the core lean principles of eliminating waste remain relevant, the nature of waste in retail logistics differs from that in traditional manufacturing. The focus is not on transforming products but on delivering them efficiently. By applying lean thinking in retail logistics, supermarkets can reduce operational costs, optimize their inventory management, improve their customer service, and enhance their profitability.

In the retail sector, managers can employ similar strategies and methodologies to pinpoint and rectify various forms of inefficiency, thus enhancing operational effectiveness. Lean methodologies encompass several key practices: (1) streamlining work processes to ensure clarity, feasibility, and manageable control from start to finish, (2) adopting a pull-based approach to replenishment, aligning the supply with actual customer demand to minimize the inventory and optimize space, (3) identifying and resolving bottlenecks across the supply chain to streamline delivery, reduce transportation costs, minimize defects, and enhance operational flow, and (4) curbing the wastage of effort, time, materials, and movement by pinpointing core business values and eliminating unnecessary elements from the process.

Implementing lean principles in retail yields substantial benefits, including heightened cost efficiency, enhanced employee productivity, and the reduced wasting of resources and time. Consequently, these improvements significantly bolster customer satisfaction levels and store profitability.

In essence, the core of contemporary business lies in trimming superfluous processes and enhancing customer experiences. Lean retail aligns with industry best practices, fostering heightened productivity and economic performance within stores. Utilizing the lean approach can thus serve as a yardstick for evaluating the efficiency of retail management, whether at the company, store, or product category level.

3. Methodology

The main steps of the method that guided this study were the following:

• The definition of value in the context of supermarket internal logistics. In this step, the criteria are defined to establish the frontier between value and waste;
• Classification of the types of waste, aligned with the criteria defined in the previous step. Other existing classifications of waste were used as a reference, but a new and more suitable classification is created;
• Identification of all of the activities/tasks carried out by workers in the internal logistics of the chosen supermarket;
• From all activities and tasks observed, as well as inventory, the research team identifies the ones that are adding value and assign to the other ones the corresponding type of waste;
• The research time also performs a multi-moment analysis to measure the percentage of time spent by workers on value-adding activities.

4. Case Study Application

This chapter provides a comprehensive framework for analyzing and optimizing internal logistics operations, using a retail supermarket located in northern Portugal as a study case.

4.1. Background

The internal logistics process case of this study (supermarket store in the north of Portugal) begins with the reception and unloading of pallets at the warehouse (see Figure 1). During this process, the cargo is checked and the stock entry is recorded in the computerized management system. Pallets containing products for which there are shortages in the store are identified as “VIP” (very important product) to signal the urgency of handling these products. Following reception, the depalletizing process ensues, which consists of collecting the products from the original pallet and transferring them to several other pallets according to their category (categories are related to the respective aisles in the supermarket). These category-specific pallets remain in the warehouse until the replenishment process takes place.

During replenishment, category-specific pallets are transported to the supermarket corridors. Products that are missing from the shelves are then replenished to align with the planogram. Any surplus products are returned to the warehouse, separated by category, and stored as “excess pallets” for future use. As part of the pre-store opening protocol, these excess pallets undergo dispatching, which initiates an extensive shelf replenishment process, ensuring that the shelves are completely stocked with products retrieved from the warehouse and guaranteeing product availability and visibility to customers upon their arrival. Refer to Figure 1 for an overview of the macro-level process.

4.2. Value and Waste Definition

To concretely apply these redefined perspectives on value and waste within internal logistics, the entire spectrum of internal logistics operations was studied—from the reception of goods to the replenishment of products on the shelves, as well as the storing of surplus products. In alignment with the redefined concept of value regarding the internal logistics of a supermarket that is proposed in this article, which stipulates that any action propelling the product closer to the shelf, in the proper position and at the updated price is a value-added action, each task within this internal logistics process must be classified accordingly.

Following the detailed analysis of this process, and in order to minimize the total logistics costs, we identified six types of waste present in the inbound logistics process of a retail supermarket while focusing on inefficiencies that encompass excessive transport, unnecessary motion, processing redundancies, inventory imbalances, waiting time, and errors:

Over-production (too many products): receiving, handling, transporting, and storing more products than necessary on the shelves. Any product that arrives at the supermarket that is not needed on the shelves is waste. This leads to excess handling, transport, and inventory.

Over-processing (excessive transport): all transportation that does not bring the product closer to the shelf. This includes transporting products that are not needed from the warehouse to the shelves and returning them to the warehouse without efficiently positioning them for sale. It also includes any transport that takes the products away from the shelves.

Motion: any movement of people that goes beyond what is necessary to complete a step in a process. Examples of this are people reaching for products in high, low, or distant locations and people moving for the purpose of searching, checking, or verifying.

Inventory and stockouts: inventory is the stock beyond what is strictly necessary (in all steps of the process), and leads to product spoilage, obsolescence, or increased storage space and costs. Stockout is the inexistence of products on the shelf, resulting in lost sales, dissatisfied customers, and missed revenue opportunities.

People waiting: includes people waiting for information, products, transport equipment, or for other people. This is the least bad waste since it is the easiest to spot.

Errors or defects: activities that result in errors or defects, such as labeling a product with the wrong price, misplacing items on shelves or in the warehouse, and other mistakes that compromise product quality, leading to customer dissatisfaction, increased returns or exchanges, and the potential loss of revenue.

Table 1. Comparison of types of waste approaches.

Traditional Lean	Lean Logistics	Lean Retail	Total Flow Management	Lean Retail Logistics
Transportation	Transportation or conveyance	-	Material Movement (too much transportation)	-
Inventory	Inventory	Inventory and Stockouts	Material waiting (too much inventory)	Inventory and Stockouts
Movement	Motion	Unnecessary Movement	People movement (too much motions)	Motion
Waiting	Delay or waiting	Waiting Time	People waiting	People Waiting
Overproduction	Overproduction	-	Over delivery (too much quantity)	Over-Production (Too many products)
Incorrect or unnecessary processing	-	Over-processing	Over processing (difficulties)	Over-Processing (Excessive Transport)
Defect	Errors	Defects	Errors and defects	Errors or defects
-	Space utilization	-		-
-	-	Underutilized Employees		-

provides a comparative analysis of the waste types of the five lines of thinking: traditional lean, lean logistics, lean retail, and the proposed lean retail logistics. The most important distinction between traditional lean thinking and our proposal (called lean retail logistics waste classification) is on the different way on defining “Value”. While in lean thinking, value-added activity is defined as any activity that the customer is willing to pay for, in our proposal, it is any activity that brings the product closer to its proper location on the shelf and being labelled at the right price. Other activities are waste. As can be observed, unlike in classical lean classification, transportation is actually a value-adding activity in our proposal.

4.3. Process Analysis

To comprehensively illustrate the application of the redefined concepts of value and waste within the internal logistics process, each macroprocess in a specific retail store in the north of Portugal was meticulously dissected into detailed tasks. These tasks were categorized based on their alignment with the refined understanding of value, distinguishing between activities that directly contribute to facilitating the product’s journey towards customer availability (VA) and those that do not (NVA).

Table 2. Waste types of the observed activities in the first two processes.

Macro-Process	Activity Description	VA/NVA	Proposed Waste Classification
Receiving, Unloading, and Checking Cargo	Receiving sheets with information on incoming cargo	NVA	Motion
	Check pallet numbers, stamp, and sign reception sheets	NVA	Motion
	Place pallet holder inside the truck	NVA	Motion
	Transport pallets from truck to the warehouse	VA
	Scan Pallet Support	NVA	Motion
	Transporting pallets to the depalletizing area	VA
	Deliver reception sheet guides to the driver	NVA	Motion
	Single-product pallet storage	NVA	Inventory and Stockouts
Depalletizing	Gemba walk to identify pre-ruptures and ruptures	NVA	Motion
	Record found ruptures in the system	NVA	Inventory and Stockouts + Errors or defects
	Positioning empty pallets to create depalletized pallets	NVA	Motion
	Choose pallet to be depalletized	NVA	Motion
	Transporting pallet to the depalletizing area	VA
	Positioning and adjusting pallet	NVA	Motion
	Identify VIP products on the pallet	NVA	Motion
	Remove products from the received pallet and position them on category-specific pallets.	VA
	Product stored in the warehouse awaiting replenishment	NVA	Inventory and Stockouts
	Store products not needed for replenishment	NVA	Over-Production + Inventory and Stockouts

presents a detailed breakdown of each task within the receiving, unloading, checking, depalletizing, shelf replenishment, and storing processes, categorized according to the new concept of value and the definition of waste. The identification of each task as value-added or wasteful serves as the basis for implementing lean concepts and principles to improve workflows and increase productivity and service quality.

From the data presented in Table 2 and

Table 3. Waste types observed in the second two processes.

Macro-Process	Activity Description	VA/NVA	Proposed Waste Classification
Shelf Replenishment	Check Daily Work Log	NVA	Motion
	Check status of the supermarket aisles	NVA	Motion
	Select depalletized pallets for transportation to the store	NVA	Motion
	Transport pallet to replenishment aisle	VA
	Transfer items from pallet to the shelf (replenishment)	VA
	Pull product from back to the front of the shelf	VA
	Fill rupture holes with other products	NVA	Errors or defects; Motion
	Price updating	VA
	Check the need for replenishment	NVA	Motion
	Search for the product needed for replenishment (warehouse search and movement)	NVA	Motion
	Transport replenishment product to the aisles	VA
	Replenish product on the shelf	VA
Storing	Return surplus products to the warehouse	NVA	Over-Processing
	Store surplus products	NVA	Over-Processing, Motion
	Identify product in pre-rupture and rupture	NVA	Motion
	Validate ruptures in the system	NVA	Motion + Errors or defects
	Save records of the day’s disruptions	NVA	Motion
	Search for the product needed for replenishment	NVA	Motion
	Adjust stock records	NVA	Motion + Inventory and Stockouts
	Place orders to supplier	NVA	Motion

, the reader can verify that most of the observed activities are non-value-adding activities and that the only value-added activities are the ones associated to the transport of goods one step closer to the right position on the shelf, updating the prices, and pulling products from back to the front of the shelf. Most of the observed activities are non-value-adding activities.

In the list of activities presented above, there are 10 value-adding and 28 non-value-adding activities. Approximately 26 percent of activities are value-added, but this figure alone does not provide much insight.

To obtain an idea of the workload in terms of labor required for the two types of activities, we conducted a multi-moment analysis. Over 5 days, from 4 a.m. to 10 p.m., 350 instant observations were made at random intervals, recording what activities the employees were performing. From 4 a.m. to 8 a.m. the store is closed, and the workers can be more effective in replenishing the store with products.

$$n={\displaystyle \frac{Z^2\times p\times (1-p)}{E^2}}$$

(1)

The number of observations was determined using Equation (1), assuming a confidence level of 95% (Z = 1.96) and a maximum error of 5% in the sample (E = 0.05).

5. Results

This study resulted in three main outcomes. The first is a proposal of a classification system for value-adding and non-value-adding activities in the internal logistics of supermarkets. The proposed concept of value includes any action that moves the product closer to the shelf, the correct position, and having an updated price. All other activities are non-value-adding activities. This proposal includes the following six different types of non-value-adding activities:

• Over-production (too many products);
• Over-processing (excessive transport);
• Motion;
• Inventory and stockouts;
• People waiting;
• Errors or defects.

These concepts and the classification of waste types were applied in a real supermarket, specifically a Modelo store in the Sonae Group, which operates the Continente brand, one of the largest and most influential retail chains in Portugal. Celebrating 40 years of operation, the group runs approximately 400 stores nationwide. The findings from this case are highly relevant not only for other stores within the Sonae Group but also for similar retail operations across Portugal.

From the observations obtained in this study, the results were as follows:

• 10 value-adding activities were identified;
• 28 non-value-adding activities were identified.

The distribution of these activities in the macro processes identified above for the internal logistics of a supermarket is presented in

Table 4. Activities associated with each macro stages of the internal logistics.

Macro-Process	Number of Non-Value-Added Activities	Number of Value-Added Activities	Total Number of Activities in the Process
Receiving, Unloading and Checking Cargo	6	2	8
Depalletizing	8	3	11
Shelf Replenishment	6	6	12
Storing	8	0	8

.

Regarding labor requirements in terms of man-hours, the results showed that, in the observed internal logistics processes of a supermarket in northern Portugal, 65% of the available labor was used for value-adding activities (mainly transporting the products to the shop shelves), while the remaining 35% was used for non-value-adding activities.

While this study focuses on a single Modelo store, it is important to note that this store is highly representative of the typical operations in the Sonae Group. The Sonae Group, being one of the largest retailers in Portugal, operates across various regions with stores that share similar logistics processes and operational structures. Therefore, the results observed in this case study can be seen as broadly applicable to other supermarkets within the group.

However, we acknowledge that the findings may be influenced by specific factors related to the store’s size, layout, and customer flow. While the results provide valuable insights into logistical inefficiencies, variations in these factors could lead to different outcomes in smaller stores or stores with distinct operational models. For instance, supermarkets located in urban areas with higher customer traffic might experience different logistical challenges compared to those in more rural areas.

Further, it is important to consider that different store formats, such as hypermarkets versus smaller neighborhood stores, may yield distinct insights. Therefore, while the conclusions of this study are relevant to large-scale supermarket operations in Portugal, further research would be beneficial to explore how these findings apply to a broader range of retail contexts.

6. Conclusions

In conclusion, this research has undertaken a comprehensive examination of internal logistics operations within the retail sector, ranging from the reception of goods to the replenishment of products on the shelves. Embracing the herein-redefined perspectives on value and waste, which emphasize the significance of actions that propel products closer to the shelf with accuracy and updated pricing, each task within this internal logistics process has been subject to careful reevaluation. This study has also shed light on the inefficiencies present within the inbound logistics processes, proposing six types of waste that are present in logistics operations: over-production (too many products), over-processing (excessive transport), motion, inventory and stockouts, people waiting, and errors or defects. Each of these inefficiencies contributes to increased costs and decreased operational effectiveness. By recognizing and addressing these wastes, retail businesses can unlock significant opportunities for improvement.

From the observations made in the case studied, 10 value-adding and 28 non-value-adding activities were identified and, according to the results from a multi-moment analysis, 35% of the workers’ available time is used in non-value-adding activities.

Through the development of a classification model tailored to the retail sector, this study has provided a structured framework for identifying and categorizing operational activities within the inbound logistics process. By analyzing qualitative data, the model provides a systematic approach to categorizing operational activities, distinguishing between those that contribute to value creation and those that detract from it. This refined understanding of value creation and waste reduction aims to bridge the gap between theoretical frameworks such as lean thinking and the practical complexities of retail logistics.

This study not only contributes to academic discourse but also serves as a practical tool for retail businesses. For example, the classification model can be applied in other retail contexts, such as warehouses, distribution centers, or other supermarket chains, to identify and mitigate inefficiencies. Retailers could use this model to assess their own logistics operations and take targeted actions, such as reorganizing store layouts to reduce motion waste or optimizing inventory levels to prevent stockouts. Additionally, the model can assist in training employees, ensuring that their activities are aligned with value-creating tasks.

In terms of future research, several areas for the refinement and expansion of the classification model are apparent. For instance, research could explore the impact of technological advancements, such as automation or AI-driven inventory management, on the efficiency of logistics operations and the application of the classification system. Future studies could also test the model in various retail formats (e.g., hypermarkets, convenience stores, or online platforms) to provide insights into its scalability and adaptability across different contexts.

By aligning internal logistics operations with the redefined concept of value, retail businesses can streamline their processes, improve their efficiency, and ultimately enhance customer satisfaction. The classification system presented here serves as a step toward more sustainable and cost-effective retail logistics operations, with broad potential for future development and application.