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Johannesburg - Fifty years ago it was a simple fact of business that manufacturers had to move goods from the factory to the retailer’s back door.
As a result, retailers were never in complete control of their supply chains.
Faced with any unexpected demand for stock, they were to some extent at the mercy of the manufacturer’s delivery schedule.
Today this system is quite possibly facing extinction, according to Diederick Stopforth of SkyNet Worldwide Express.
Two decades ago some retailers began to realise that the cost of logistics – and the congestion at their back doors – could be reduced if they established their own distribution centres (DCs), said Stopforth.
That way, they could buy in bulk and distribute accurately and efficiently from the DC to various stores.
Shoprite and Edgars were leaders and have been doing this for decades. It has now become a standard feature of large retail chains.
Lower distribution costs and an ability to reduce the lead times between order and delivery, were the drivers.
Economic crisis
The global economic recession is another factor behind the change in distribution systems, said Stopforth.
From manufacturers to retailers, businesses are attempting to keep lower levels of inventory to reduce both finance and warehousing costs.
Manufacturers want to spend less on storing both supplies and finished product; retailers want to keep stock as low as they can, while still keeping up with demand.
Although the cost of an express parcel delivery is higher than the traditional transport method, it enables manufacturers to reduce stock throughout the system and to virtually eliminate the risk of obsolete or over-stocked positions, said Stopforth.
These users are working out that being on the shelf with the right product at the right place and time is crucial.
"In the 21st century digital information and speed are used, not mountains of stock, to achieve the same result," he said.
Online shopping in general is growing at more than 30% per year.
As a result, retailers were never in complete control of their supply chains.
Faced with any unexpected demand for stock, they were to some extent at the mercy of the manufacturer’s delivery schedule.
Today this system is quite possibly facing extinction, according to Diederick Stopforth of SkyNet Worldwide Express.
Two decades ago some retailers began to realise that the cost of logistics – and the congestion at their back doors – could be reduced if they established their own distribution centres (DCs), said Stopforth.
That way, they could buy in bulk and distribute accurately and efficiently from the DC to various stores.
Shoprite and Edgars were leaders and have been doing this for decades. It has now become a standard feature of large retail chains.
Lower distribution costs and an ability to reduce the lead times between order and delivery, were the drivers.
Economic crisis
The global economic recession is another factor behind the change in distribution systems, said Stopforth.
From manufacturers to retailers, businesses are attempting to keep lower levels of inventory to reduce both finance and warehousing costs.
Manufacturers want to spend less on storing both supplies and finished product; retailers want to keep stock as low as they can, while still keeping up with demand.
Although the cost of an express parcel delivery is higher than the traditional transport method, it enables manufacturers to reduce stock throughout the system and to virtually eliminate the risk of obsolete or over-stocked positions, said Stopforth.
These users are working out that being on the shelf with the right product at the right place and time is crucial.
"In the 21st century digital information and speed are used, not mountains of stock, to achieve the same result," he said.
Online shopping in general is growing at more than 30% per year.
