It is always difficult to choose a starting point for something like this, but the 1970s will serve well enough as the beginning of the modern era of logistics and distribution management. It was in the 70s that distribution began to be talked about as a separate concept (as noted by Alan Rushton in The Handbook of Logistics and Distribution Management). Many companies began to recognise the usefulness and efficiency gains of giving distribution its own place at the table when defining the company’s functional management structure.
At the same time, other organisations were exploring new ways to structure and control their distribution chains. The balance of power was beginning to shift away from suppliers and manufacturers and closer towards major retail entities. As these retail establishments put their own distribution structures into place, they settled on the concept of establishing local and regional distribution centres for their stores that shaped their poerations for many years to come.
Basic logistics and distribution management principles were developed in the early and mid 1980s
In this era, logistics and distribution management began to see more professional treatment, largely due to rapid increases in costs and a growing understanding of the true costs of distribution.
This professionalism in turn led to logistics and distribution management plans being made in the long term, and deliberate efforts being made to identify and enact savings. Strategies pursued included ‘lean’ processes – reductions in stock holding – and centralised distribution systems, aided by relatively new computer-aided information and control systems. 3PLs also entered the market in greater numbers at this time, which contributed greatly to advances in technology and information handling systems within the industry.
Many companies also recognised the need for truly integrated logistics and distribution management systems around this time.
The late 80s and the 1990s saw these logistics and distribution management principles refined and applied
As information technology became more advanced across many industries, logistics and distribution management processes began to be more widely integrated. Inbound, or materials side management was finally clearly linked with outbound, or distribution side management, and the term ‘logistics’ came to mean both functions together. One of the most important adaptations, though, was the recognition that it wasn’t all about the physical aspects – the movement of goods. The movement of information was at the heart of logistics and distribution management, and the key to reliability and cost reduction.
Especially in the mid to late 1990s, logistics and distribution were seen to comprise not just an organisation’s internal functions, but to include any outside functions that contribute to the delivery of the final product to the end customer. This became known as ‘supply chain management’ around this time.
The concept of the supply chain allowed planners to address the fact that many different organisations contribute to getting most products to market. This understanding in turn allowed retailers and manufacturers (among other distribution partners) to act jointly in the creation of distribution pipelines, and improve the efficiency and reliability of all of their distribution processes together. Many 3PLs were, of course, also involved.
In the last 14 years, logistics and distribution management have matured, and borne fruit
Organisations of all types have struggled to increase efficiencies and profitability in the face of narrowing margins in recent years. The struggle has produced many improvements of the basic logistics and distribution management process, though.
For example, supply chain and logistics functions are now seen as central to the success of the business, when they had once been considered peripheral. This change of perspective has let to substantial increases in profitability. Specifically, distribution systems were no longer considered merely burdens, but as opportunities to add value to the product at each stage, and are in fact part of the core business, not a necessary evil to be minimised and cheapened at all costs.
This leads us to today, where businesses of all sizes and descriptions are seeking logistics and distribution management partners who can keep their entire supply chain efficient, resilient, and responsive to opportunity.
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