The Contribution of Physical Distribution Management to the Competitive Supply Chain Strategies of Major UK Food Retailers

Abstract

Innovation in physical distribution (PD) is easily copied, so best practice rapidly achieves universal application and thus PD becomes a commodity back-office function. However, as a core component of the supply chain, PD is wrapped up in the current paradigm of "competing supply chains". Competing firms, therefore, tend to run competing PD systems even though logic suggests that to remove PD from the competitive arena may unlock inter-firm efficiencies and thus cost savings. The reasons why this logic is ignored include branding, organisational cultures of control, market aggression and reluctance to disagregate vertically systems which were assembled during periods of innovative development. Whilst there are clearly supply chain elements that continue to contribute to competitive edge, such as range, product development, procurement and replenishment strategies and information systems, is it now the case that better value can be delivered for customers through the horizontal integration of competing distribution systems? These issues are explored through research in the UK food retailing industry, with the conclusion that a combination of certain circumstances, in the presence of given enablers, may remove distribution systems from the competitive arena.