Answer to Question #191781 in Economics for Karabo Maluleke

Question

2. The consolidation that has developed at the retail end of many supply chains has had an important impact. What changes have occurred in supply chain management because of retail consolidation and the related power shift?   ​​5

NB: Please check plagiarism and required marks is 5marks

Answer 1

The distribution of goods is a rather complex system that dynamically changes under the influence of internal (investment policy, the level of logistics costs, the level of changes in the structure of the assortment of goods, the degree of scientific and technological development, etc.) and external factors (the geographical location of the links of the system, the concentration of suppliers and consumers, the level and dynamics of demand, competitive environment, tariffs for transportation and storage services, etc.), which has diversification interactions. Thus, with the need to optimize and rationalize the distribution of goods, managers do not always achieve the best results, due to the complexity of obtaining or processing information, the ability to make decisions.

The main drawback of existing research in the field of commodity circulation management is that they only provide a formalization of the structure of commodity circulation processes, but do not provide an opportunity for managers to use them in retail trade enterprises in order to systematically model the elements of the logistics system and optimize commodity circulation. In this regard, taking into account all the highlighted positive aspects of logistics methods of managing goods movement, it is necessary to develop a detailed methodology for an integrated model of managing goods movement as applied to retail trade enterprises.

The transformation of the logistics systems for the distribution of retail trade enterprises in recent years is largely associated with the transformation of relations in the context of the elements of the logistics system. The need to transform relations in logistics systems is due to the dynamic development of retail trade associated with constantly changing environmental factors and heightened competition.

The main factors that determine the feasibility of transformation of relations in the logistics systems of retail trade enterprises are: intensive growth of retail trade networks and their development in regional markets; significant expansion of the range of goods, resulting in an increase in material flows of finished products; the need for a quick response of retailers to unstable customer demand, while there is a need for effective inventory management; intensive implementation of innovative sales methods, a logistic approach to enterprise management; the growth of logistic interaction of retailers with manufacturers and the reduction of traditional systems of functioning of the wholesale and retail link, which results in a transformation of the attitude of the manufacturer, intermediary and retailers; insufficient level of development of transport and warehouse infrastructure in the regions (Chelyabinsk region), which complicates the logistics of trade enterprises located in this territory; the need to reduce the cost intensity of trade operations in the context of heightened competition in the retail market.