On the one hand, a relatively strong economic environment in the UK continues to provide a sound basis for industry growth. On the other, the distribution market is undergoing a series of structural changes which mean that, for the majority of industry participants, margins and profits remain extremely competitive. Furthermore, this situation seems unlikely to change in the foreseeable future. The distribution market in 1996 is characterised by a much higher level of sophistication than previously. Both customers and transport providers have radically changed over the past 20 years, and have managed to transform the way goods travel through the supply chain.
Firms now look on the distribution function as an integral part of their business.
The rise in popularity of supply chain management, or logistics as it has become known, requires greater co-operation between distribution companies and their customers. At the same time, customers are demanding higher levels and a wider range of service from their operator. The development of supply chain management techniques has been given further impetus by the greater level of competitiveness in the business environment. Time compression, longer and more complex supply chains, product proliferation and a systematic downward pressure on costs have all put pressure on the distribution industry to improve performance. At the retail end of the supply chain, growing concentration and more intense competition has focused retailer attention on extending control over and improving the supply chain.