Introduction to Retail Logistics
The word logistics is derived from the french word “loger” which means “to quarter and supply troops”. When large number of troops and their equipment move, meticulous planning is required to move volumes of goods and ammunition in that direction. From a marketing point of view, customers are satisfied when they get right product at the right place, at the right time and in the right quantity. Retail logistics system ensures smooth flow of goods to customers through efficient movement of logistics.
Meaning of retail logistics
‘Retail logistics’ is the organist process of managing the flow of merchandise from the source of supply to the customer.
Large retailers deal in a wide variety of products. This has created a need for a systematic planning of movement of numerous goods until they are delivered to the customer. Retail logistics ensures that everything is in place to offer better delivery and service at lower prices by way of efficient logistics and added value.
Functions of retail logistics system
1. The increased product variety in stores has forced the retailer to follow an effective logistics system. It takes care of the
- flow of merchandise from the producer or intermediary to the warehouse,
- arrangement of transport to the retail units till the merchandise is sold and delivered to the customers.
2. The system satisfies the customer by taking the right product to the right customer, at the right place and at the right time. This requires a planned approach right from the starting point till the point of delivery.
3. Profitability of the present and future are maximized by the logistics system by means of fulfillment of orders in a cost effective way.
4. It ensures the availability of infrastructure such as warehousing, transport, inventory and administration. The inter relationship that exists between these elements are effectively coordinated.
5. Retail logistics system strives to add value for the customer. For this purpose, the cost elements in the supply chain are brought under the direct control of the retailer. Depending on sales volume, retailers create central or regional distribution centres. They decide on major investment in property, plant and equipment with associated overheads.
6. The functions incorporated in the retail logistics are summarized.
- The physical movement of goods
- the holding of the goods in stock holding points
- the holding of goods in quantities required to meet demand from the consumers
- the management and administration of the process in modern complex distribution system.