Modelling the Impact of Factory Gate Pricing on Transport and Logistics

Over the past 30 years, the grocery supply chain has evolved considerably in the drive to reduce costs and improve the service level provided to customers. The 1970s and 1980s saw the development of distribution centres (DC) for ambient products, with retailers taking over responsibility for deliveries to their stores. The 1990s brought the introduction of consolidation centres to reduce the level of transport demand required to deliver products to the DCs (Finegan, 2002). The latest development is for retailers to take control of the delivery of goods into their DCs. This movement has gained momentum recently and is known as factory gate pricing (FGP). The evolution of grocery distribution is shown in Figure 7.2.1.