Abstract:

Distribution system significantly influences not only retailers’ and their suppliers’ cost structure, but also other connected processes (e.g. ordering, inventory replenishment) with direct consequences on product availability levels and consequently on end customer satisfaction. Therefore, changing of retail distribution system causes important process and organisation changes for both retailers and their suppliers and almost never occurs without significant obstacles. The goal of this paper is to provide profound overview of retailer’s and their supplier’s reasons for changing of distribution model from direct store delivery to centralized distribution, and to highlight centralized distribution’s main benefits and downsides. Methods used for empirical research are semi-structured deep interviews with retailers and their suppliers, as well as causal mapping for purpose of representing cause and effect analysis of research problem. Result indicate high degree of retailers’ satisfaction with CD mainly due to lower costs, and increase in sell-out traffic. While suppliers also feel cost reduction, they are not satisfied with change of distribution system model. Nevertheless, suppliers’ main reason for change is ensuring long-term cooperation with retailers – their main path to end customers.