This reorganisation of production caused profound changes in the distribution system. More and more, manufacturing firms centralised their distribution in regional and even European distribution centres. This evolution went hand in hand with a adoption of new information technologies that were common in the U.S. and that were gradually applied by manufacturers on a wider European scale. A major part of this report is devoted to the reorganisation of the distribution system that followed the implementation of the single market program. The concept of vertical integration is at the heart of this reorganisation.
Distributive operators strive to optimize the efficiency of the distribution chain.
From a theoretical perspective, this optimum is attained when the chain is fully vertically integrated. This occurs when either a single distributive operator controls and optimizes the entire distribution chain or when perfect coordination between the distributive operators is realized. In reality, the distribution chain usually consists of several distributive operators with different objectives and, hence, imperfect coordination. The basic trends underlying the distributive trades in the last decade can be interpreted as an effort to move towards a vertically integrated distribution chain. In the complex setting of an integrating market, European retailers and manufacturing felt the need to tightly control the distribution process.