Demand management in downstream wholesale and retail distribution: a case study

Abstract

PurposeThis case study aims to examine the role of demand management in balancing distribution efficiency and responsiveness to customer needs in the downstream of a retail supply chain.Design/methodology/approachA major machine part supplier in Australia is used as a case study to investigate the challenges faced by the industry in distributing goods to customers. The use of demand management techniques to help improve distribution efficiency without significantly impacting on responsiveness is also explored.FindingsThe findings of the case study reveal that appropriate demand management measures, such as customer segmentation and price discrimination, can help improve overall distribution efficiency of the supply chain while providing the required responsiveness to meet genuine customer needs. Other management attempts, such as vendor‐managed inventory and rationalisation of retail network, can facilitate demand aggregation and improve vehicle utilisation in distribution with minor impact on customer service. These changes require a full understanding of customer requirements and supply capabilities of the company as well as corresponding adjustments in business strategy, leadership style, and organisational culture.Research limitations/implicationsThis study lends insight into the use of demand management techniques to improve efficiency in downstream wholesale and retail distribution, thereby enhancing sustainability and profitability of business. To serve mainly as a case study and an illustration of the approach, the scope of the study is limited to six stores in the distribution network of the case company.Practical implicationsRetailers can explore the use of demand management techniques to increase distribution efficiency and hence competitiveness of the company. The approach can also assist managers in adopting best practices among stores and facilitate more effective allocation of distribution resources to serve different market segments.Social implicationsUsing demand management techniques to increase distribution efficiency can reduce delivery frequency and total travel distance. This will help lessen energy usage, carbon emission, traffic congestion, and other negative impacts on the environment.Originality/valueResearch in retail distribution efficiency to date focuses mainly on delivery optimisation through routing and scheduling. Attempts to link demand with supply and use demand management techniques to improve distribution efficiency are relatively limited. This paper fills the gap in the literature by investigating the value of demand management in distribution and explores empirically the significance of the approach to achieve higher wholesale and retail distribution efficiency.