IMPACT OF THIRD PARTY LOGISTIC

Impact of third party logistic in the supply chain processing



Impact of third party logistic in the supply chain processing

Introduction

In the late 1990s, Sparks (1998) wrote that there had been a “logistical transformation” of British retailing in the previous decade. At the same time Fernie (1997) provided a review of these logistical changes, commenting that the key challenges for the future were those in relation to political, environmental and technological change. The British Government had imposed a brake on out-of-town shopping developments, and along with environmental groups was seeking to improve recycling of waste and reduce “food miles” in the supply chain. Concurrently, the dot.com boom was producing forecasts of home shopping sales in Europe to account for up to 25 per cent of overall sales (Mandeville, 2000). Fernie (1997) noted that logistics managers faced new challenges in the Millennium although the pace of change would be difficult to predict. Together, Fernie and Sparks (1998, 2004, and 2009) have produced three editions of Logistics and Retail Management since the late 1990s; each edition has involved a considerable re-write to accommodate changes in the retail supply chain.

Retailers were once the passive recipients of products, allocated to stores by manufacturers in anticipation of demand. Recently, retailers are the controllers of product supply in reaction to known customer demand. They control, organise and manage the supply chain from production to consumption. This is the essence of the retail logistics and supply chain transformation that has taken place during the last 20-30 years. Tech Support advisors in the UK stores to help customers make their choice, the company rapidly grew its presence. Tesco now sells one in every six microwaves in the UK and one in four small-screen TVs. The sales in electrical have doubled in the last four years and around 20% are through online channel. The company has doubled its market share in games during 2009 as a result of allocating it more space in-store, revamping the range and layout and being more competitive on new releases. The company has been taking several measures to attain the competitive advantage compared to the other retailers already present in the market. For example, Tesco teamed up with DreamWorks studio for the exclusive rights to sell the short animated Christmas film Merry Madagascar. This groundbreaking relationship was the first of its kind in the industry and enabled the company to sell over one million Merry Madagascar DVDs. Furthermore, sales in toys have grown 25% in FY2010 with online sales up more than 60%; clothing sales grew by 7.3%, to reach £1billion ($1.5 billion) in sales for the first time, helped by a 15% increase in children's wear and the launch of the online clothing range.

Going forward, non food categories will be the primary growth driver for Tesco and its increasing market share in this segment will facilitate strong top-line growth. Also, the company has reached a certain level of saturation in the UK ...