The impact of retailer distribution centres on supply chain competitiveness

Abstract

The increase in global competition has led to many companies examining how they do business in an increasingly competitive environment, and in many cases adopting models that impact their supply chain competitiveness. Many companies are struggling to find the balance between cost containment and the increasing demands of customers requiring them to demonstrate greater flexibility and achieve higher service levels. This research evaluates the effectiveness of supply chain strategy, specifically related to the decisions made when retailers elect to insert their own distribution centres and the choices they make in the design thereof. Critically, these design decisions were evaluated from both a supplier and retailers perspective against academic articles which relate to effective supply chain collaboration methods. The research examined the consequences of an ineffective supply chain design decision and how this decision resulted in a constraint in the supply chain which reduced competitiveness through higher inventory levels and reduced sale throughput as a result of lost sales and low service levels. This research is exploratory by design and purposive sampling was used to select interviewees that would bring depth to the research by providing understanding as to the rationale behind the supply chain strategy selected. In addition, the research was conducted by reviewing quantitative data collected both pre and post the insertion of a retailer distribution centre to statistically compare the impact of this business strategy on supply chain competitiveness.