i Logistics and Retail Management ii THIS PAGE IS INTENTIONALLY LEFT BLANK iii Fourth Edition Logistics and Retail Management Emerging issues and new challenges in the retail supply chain Edited by John Fernie & Leigh Sparks iv Publisher’s note Every possible effort has been made to ensure that the information contained in this book is accurate at the time of going to press, and the publishers and authors cannot accept responsibility for any errors or omissions, however caused. No responsibility for loss or damage occasioned to any person acting, or refraining from action, as a result of the ma terial in this publication can be accepted by the editor, the publisher or any of the authors. First published in Great Britain and the United States in 1999 by Kogan Page Limited Second edition published in 2004 Third edition published in 2009 Fourth edition published in 2014 Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be repro duced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned addresses: 2nd Floor, 45 Gee Street 1518 Walnut Street, Suite 1100 4737/23 Ansari Road London EC1V 3RS Philadelphia PA 19102 Daryaganj United Kingdom USA New Delhi 110002 www.com India © John Fernie, Leigh Sparks and individual contributors, 1999, 2004, 2009, 2014 The right of John Fernie, Leigh Sparks and individual contributors to be identified as the authors of this work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
ISBN 978 0 7494 6823 1 E-ISBN 978 0 7494 6824 8 British Library Cataloguing-in-Publication Data A CIP record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Logistics and retail management : emerging issues and new challenges in the retail supply chain / [edited by] John Fernie and Leigh Sparks. â•…â•… pages cm â•… ISBN 978-0-7494-6823-1 (pbk.╇ Retail trade–Management.╇ Fernie, John, 1948-â•… II.5–dc23 2013047710 Typeset by Graphicraft Limited, Hong Kong Printed and bound in India by Replika Press Pvt Ltd v Co n t e n t s Contributorsâ•… viii Prefaceâ•… xii 01 Retail logistics: changes and challengesâ•… 1 John Fernie and Leigh Sparks The logistics taskâ•… 3 Retail logistics and supply chain transformationâ•… 6 Supply chain management (SCM)â•… 8 The grocery retail supply chain in the United Kingdomâ•… 15 Supply chain challengesâ•… 21 Conclusionsâ•… 28 02 Relationships in the supply chainâ•… 35 John Fernie Introductionâ•… 35 Changing buyer–seller relationshipsâ•… 35 Quick Response (QR)â•… 40 Efficient Consumer Response (ECR)â•… 43 The role of logistics service providersâ•… 50 Conclusionsâ•… 53 03 The internationalization of the retail supply chainâ•… 59 John Fernie International sourcingâ•… 60 Differences in distribution ‘culture’ in international marketsâ•… 66 The internationalization of logistics practicesâ•… 70 04 The international fashion supply chain and corporate social responsibilityâ•… 77 Patsy Perry, John Fernie and Steve Wood Introductionâ•… 77 The internationalization of the fashion supply chainâ•… 78 CSR in international fashion supply chainsâ•… 86 CSR in garment manufacturing in Sri Lankaâ•… 89 Conclusionâ•… 92 vi Contents 05 The footwear supply chain: the case of Schuhâ•… 101 John Fernie and Colin Temple Introductionâ•… 101 Offshore sourcing and outsourcingâ•… 102 The complexity of the footwear supply chainâ•… 104 The case of Schuhâ•… 111 Conclusionâ•… 114 06 Supply chain strategy in the fashion and luxury industryâ•… 117 Alessandro Brun and Cecilia Castelli Introductionâ•… 117 The relevance of supply chain management in luxury and fashionâ•… 118 Typical structure of the inbound and outbound supply chainâ•… 122 Frameworks for company classification and supply chain strategy selectionâ•… 123 Noteworthy examples of supply chain configurationsâ•… 134 A portfolio approach for supply chain strategy in the fashion industry: the ‘segmentation tree’â•… 143 Conclusionâ•… 144 07 Tesco’s supply chain managementâ•… 149 Leigh Sparks Introductionâ•… 149 The changing Tesco supply chain: establishing control and delivering efficiencyâ•… 152 Conclusion and lessonsâ•… 174 08 On-shelf availability in UK retailingâ•… 179 John Fernie and David B Grant Introductionâ•… 179 Consumer reaction to stock-outsâ•… 180 The causes of retail OOSâ•… 182 Methods to improve OSA: groceryâ•… 184 Methods to improve OSA: clothingâ•… 193 Methods to improve OSA: other non-foodâ•… 197 Conclusionsâ•… 200 Contents vii 09 The development of e-tail logisticsâ•… 205 John Fernie, Suzanne Fernie and Alan McKinnon Introductionâ•… 205 The growth and development of the e-commerce marketâ•… 206 Web 2.0â•… 210 Exploiting the long tailâ•… 211 Online shopping formatsâ•… 213 The e-commerce consumerâ•… 214 The grocery marketâ•… 219 The logistical challengesâ•… 221 Definition of the home delivery channelâ•… 222 Distribution of online purchases of non-food itemsâ•… 223 Distribution of online grocery salesâ•… 224 The last mile problemâ•… 226 Environmental impact of online retail logisticsâ•… 231 Conclusionsâ•… 231 10 The greening of retail logisticsâ•… 237 Alan McKinnon and Julia Edwards Introductionâ•… 237 Environmental effects of retail logisticsâ•… 238 Framework for analysing the environmental impact of retail deliveriesâ•… 239 Managing waste within the retail supply chainâ•… 249 Topical issuesâ•… 250 Conclusionâ•… 253 Indexâ•… 257 viii Co n t r i b u to r s Alessandro Brun holds a Masters degree with honours in Production and Management Engineering and a PhD on the same subject. He is Assistant Professor of Quality Management at Politecnico di Milano and is Director and Professor of training programmes in Six Sigma and in Luxury ManageÂ� ment at MIP-Politecnico di Milano.
He has published more than 20 papers in ISI/Scopus indexed journals, on the topics of supply chain management, quality management and operations improvements in manufacturing and service industries, with special attention to the luxury and fashion sectors. Cecilia Maria Castelli studied the supply chain of Italian fashion/luxury companies during her PhD at Politecnico di Milano (2006–08) and was a visiting student at Heriot-Watt University, where she decided to focus on retail strategy and operations. These research streams produced several pub- lications in international journals and conferences, co-authored with other researchers from Politecnico. Since 2008, she has lectured on supply chain and retail in the fashion/luxury market at the MBA courses of MIP- Politecnico di Milano.
She belongs to the organizing committee of the ‘International Workshop on Luxury Retail, Operations and SCM’. Currently, her main activity is business consulting on operations and supply chain management. Julia Edwards was a Research Associate at the Logistics Research Centre in the School of Management and Languages at Heriot-Watt University, Edinburgh, as part of the multi-university ‘Green Logistics’ project. Prior to that, she was a Senior Lecturer of Environmental Management at the University of Wales, Newport.
Dr Edwards has been researching and teach- ing in the areas of transport and environmental issues for the last 15 years. Currently, her research interests include carbon auditing of supply chains, e-commerce and the environment and consumer travel and shop- ping behaviour. John Fernie is Emeritus Professor of Retail Marketing at Heriot-Watt University, Scotland. He has written and contributed to numerous textbooks and papers on retail management, especially in the field of retail logistics and the internationalization of retail formats.
In 2005 he created the George Davies Centre for Retail Excellence with generous financial support from the retail entrepreneur of the same name. Subsequently much of his research has focused upon the fashion sector with work on offshore sourcing, on-shelf availability and luxury branding. He was the editor of the International Journal of Retail & Distribution Management from 1989 to 2009 and is on the editorial board of numerous marketing and logistics journals. He is Contributors ix a Fellow of the Institute of Logistics and Transport and a member of the Logistics Directors Forum.
He holds an Honorary Professorship at St Andrews University and several visiting positions at European universities. Suzanne Fernie developed, led or taught retail programmes across all the further and higher education levels from access to postgraduate. Suzanne developed the first online HNC in Marketing in Scotland, and worked with Sainsbury’s during their development in Scotland, leading a programme that developed social, academic and vocational skills for long-term unemployed people to help staff their new stores. Suzanne developed and examined MBA modules in Retailing and Services Marketing for Edinburgh Business School for many years, and taught retail classes at Heriot-Watt and St Andrews Universities.
Suzanne is a Member of the Chartered Institute of Marketing and the General Teaching Council for Scotland. David B Grant is Professor of Logistics and Associate Dean (Business Engagement) at Hull University Business School, and an adjunct professor at Mannheim Business School, Germany and Wirtschaftsuniversität (WU), Vienna. David’s doctoral thesis investigated customer service, satisfaction and service quality in UK food processing logistics and received the James Cooper Memorial Cup PhD Award from the Chartered Institute of Logistics and Transport (UK) in 2003. Research interests include customer service and satisfaction; services marketing and service quality; retail logistics; and reverse and sustainable logistics.
Recent applied research has investigated on-shelf availability and out-of-stocks, total loss and waste in food retailing, forecasting and obsolete inventory, service quality of internet retailers, and consumer logistics and shopping convenience in both grocery and non- grocery contexts. David has published over 135 publications in various refereed journals, books and conference proceedings and on the editorial board of several academic journals. He is a member of the Council of Supply Chain Management Professionals (CSCMP), the UK Logistics Research Network (LRN), and the British Retail Consortium’s Storage and DistribuÂ� tion Technical Advisory Committee. Alan McKinnon is Head of Logistics and Dean of Programs in the Kühne Logistics University, Hamburg.
He was formerly Director of the Logistics Research Centre at Heriot-Watt University in Edinburgh. A graduate of the universities of Aberdeen, British Columbia and London, he has been researching and teaching in freight transport and logistics for 35 years and has published extensively in journals and books. Alan has undertaken research and consultancy studies for numerous public and private sector organizations in the United Kingdom and overseas and been an adviser to several UK government departments and parliamentary committees, the European Commission, the International Transport Forum, the International Energy Agency and OECD. Between 2010 and 2012 Professor McKinnon was Chairman of the World Economic Forum’s Logistics and Supply Chain Industry Council.
In 2012 he was appointed to the EU High Level x Contributors Group on Logistics set up to advise the EC Transport Commissions, Siim Kallas. Alan is also a lead author of the transport chapter of the 5th Assess� ment Report of the Inter-governmental Panel on Climate Change, which will be published in 2014. Much of his research in recent years has focused on sustainable logistics and in particular the links between logistics and climate change. Patsy Perry is Lecturer in Fashion Marketing in the School of Materials at the University of Manchester.
Previously, she was Lecturer in ManageÂ�ment and Deputy Programme Director of the MSc in International Fashion Marketing in the School of Management and Languages at Heriot-Watt University, Edinburgh. She completed her PhD on Corporate Social ResponsiÂ� bility in garment supply chains in 2011, and since then has published a number of textbook chapters and journal articles on the topic. Her interest lies in the application of supply chain management solutions to reconcile the conflict between commercial pressures and ethical demands in garment sourcing networks. She is also a regular contributor to the Ethical Fashion Forum’s online Source magazine.
Leigh Sparks is Head of the Stirling Graduate School and Professor of Retail Studies at the Institute for Retail Studies, University of Stirling, Scotland, UK. Leigh has been previously the Head of the Department of Marketing, the Director of the Institute for Retail Studies and the Dean of the Faculty of Management (1995–2000).
