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Retail logistics: changes and
challenges
John Fernie and Leigh Sparks
It is often taken for granted that products will be available to buy in the
shops. The cornucopia of goods that is available in a hypermarket or a
department store sometimes means that we forget how the products were
supplied. We expect our lettuces to be fresh, the new Playstation to be
available on launch day and our clothes to be in good condition and ready
to wear. With the introduction of e-commerce we have come to demand
complete availability and home delivery at times of our choosing.
Consumer beliefs and needs have altered. Our willingness to wait to be
satisfied or served has reduced and we expect instant product availability
and gratification. It should be obvious from this that the supply or
logistics system that gets products from production through retailing to
consumption has also needed to be transformed. Physical distribution
and materials management have been replaced by logistics management
and a subsequent concern for the whole supply chain (Figure 1.1).
This logistics transformation derives from cost and service requirements as well as consumer and retailer change (see Fernie, 1990; Fernie
and Sparks, 1998). Elements of logistics are remarkably expensive, if not
controlled effectively. 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
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Logistics and retail management
Materials management
Physical distribution management
Inventory
Raw materials
Storage facilities
Parts
Packaging
Finished
product
Unitization
Transportation
Materials
Communication
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Logistics management
Figure 1.1 Logistics...