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 Play station 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 Physical distribution and materials management have been replaced by logistics management and a subsequent concern for the whole supply chain. In recent years this sector has spent considerable amounts of time and money trying to improve their operations in such a way that they can respond efficiently to their customers’ needs.
2.0 Findings and Analysis
The Logistics task:
Retailing and logistics are concerned with product availability. Many have described this as ‘getting the right products to the right place at the right time’. Unfortunately however that description does not do justice to the amount of effort that has to go into a logistics supply system and the multitude of ways that supply systems can go wrong.
The logistics management task is therefore initially concerned with managing the components of the ‘logistics mix’. We can identify five components:
• Storage facilities: these might be warehouses or distribution centres or simply the stock rooms of retail stores. Retailers manage these facilities to enable them to keep stock in anticipation of or to react to, demand for products.
• Inventory: all retailers hold stock to some extent. The question for retailers is the amount of stock or inventory (finished products and/or component parts) that has to be held for each product, and the location of this stock to meet demand changes.
• Transportation: most products have to be transported in some way at some stage of their journey from production to consumption. Retailers therefore have to manage a transport operation that might involve different forms of transport, different sizes of containers and vehicles and the scheduling and availability of drivers and vehicles.
• Unitization and packaging: consumers generally buy products in small quantities. They sometimes make purchase decisions based on product presentation and packaging. Retailers are concerned to develop products that are easy to handle in logistics terms, do not cost too much to package or handle, yet retain their selling ability on the shelves.
• Communications: to get products to where retailers need them, it is necessary to have information, not only about demand and supply, but also about volumes, stock, prices and movements. Retailers have thus become increasingly concerned with being able to capture data at appropriate points in the system and to use that information to have a more efficient and effective logistics operation.
It should also be clear, however, that retailers are but one part of the supply system. Retailers are involved in the selling of goods and services to the consumer. For this they draw upon manufacturers to provide the necessary products. They may outsource certain functions such as transport and warehousing to specialist logistics services providers. Retailers therefore have a direct interest in the logistics systems of their suppliers and other intermediaries.
The process of strategically managing the procurement, movement and storage of materials, parts and finished inventory (and…