The Effect of Range Size on Distribution Costs

Abstract

Increasing specialisation and segmentation of the market, combined with the reduced growth in some areas, has resulted over the last few years in a big increase in product ranges, particularly in frozen foods. This growth has tended to reduce the volume of the major lines by fragmentation and has produced an increasing number of lines whose sales are very small. At the same time costs have been rising steadily in most areas, not least in physical distribution, which accounts for between 15 per cent and 25 per cent of total costs. It is the view of many people responsible for distribution that one significant cause of the rise of distribution costs has been the proliferation of product lines and the consequent complexity of operations which result from this.