Tuesday, March 4, 2008

Primary freight - to do or not to do?

With Foodstuffs in New Zealand apparently embarking on a national initiative to become the provider of primary freight (supplier warehouse to retailer distribution centre) one has to ask why? Three reasons are often advanced:
1) The supply chain is seen as a strategic competence and so the more control a retailer has of it the better able they are to gain competitive advantage in this area.
2) It significantly reduces retailer costs.
3) It enables greater flexibility in the retailer's distribution strategy.

Arguments 1 & 3 are perhaps to wide to argue here, so let's focus on 2 - the costs.

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