174 M.Hesse,J.-P.Rodrigue Journal of Transport Geography 12 (2004)171-184 subcontractors (Dicken and Thrift.1992:Gertler,1992: principles,firms were following a more integrated ap- Hudson,2001).The supply chain bundles together all proach,thus responding to the upcoming demand for this by information,communication,cooperation,and, flexibility without raising costs.At the same time,many last but not least,by physical distribution (Bowersox firms took advantage of new manufacturing opportu- et al.,2000).Globalization means that the spatial frame nities in developing countries.As production became for the entire economy has been expanded,implying the increasingly fragmented.activities related to its man- spatial expansion of the economy,more complex global agement were consolidated.Spatial fragmentation be- economic integration,and an intricate network of global came a by-product of economies of scale in distribution fows and hubs(cf.Dicken.1998:Held et al..1999:Knox In the 1990s.with the convergence of logistics and and Agnew,1998).Logistics thus developed against the information technologies,this principle was increasingly background of long-term structural change in economy, applied to the whole supply chain,particularly to the technology and society affecting all major industrialized function of distribution.In some highly efficient facili- countries (IMF,2001).These interrelated changes com- ties,the warehousing function went down as far as 15 prise sectoral and structural changes,mainly the rise of min worth of parts in inventory.It is now being intro- service economies,the increasing share of goods with duced in service functions such as wholesale and retail high value and low weight,consumerism,the upcoming where inventory in stores are kept at a minimum and high tech and knowledge based sectors (Castells.1996): resupplied on a daily basis. they also include a new political framework,namely the Whereas contemporary logistics was originally dedi- policies of deregulation and liberalization that were cated to the automation of production processes,in effective for the US in the late 1970s and early 1980s, order to organize industrial manufacturing as efficiently and for Europe since the introduction of the Single as possible,the subsequent modernization of logistics European Market in 1992 (Knowles and Hall,1998). can been characterized by an increasing degree of inte- These policies are now also being adopted by many gration.This trend was already on the way in the 1960s, developing countries,with varied success. as a key area for future productivity improvements The principles of modern logistics can be traced back (Bowersox et al.,1968).However,only with the imple- to Taylor (1947),the conceptual creator of fordism. mentation of modern information and communication Although his ideas were related to improving efficiency technologies did this assumption become possible.They within the factory by organizing the worker's tasks allow for the integrated management and control of along an assembly line,the temporal dimensions intro- information,finance and goods flows and made possible duced.such as sequence.duration,schedule.rhythm. a new range of production and distribution systems synchronization and time perspective are of high sig- (Abernathy et al.,2000).Step by step,and according to nificance to logistical management.What Taylor's improvements in information and communication principles of management were able to achieve within technologies,the two ends of the assembly line became the factory in terms of productivity improvements, integrated into the logistics of the supply chain:the logistics are able to achieve between elements of the timely supply of raw materials and components from supply chain:a system of integrated factories.A mile- outside,and the effective organization of distribution stone that marked rapid changes in the entire distribu- and marketing (Fig.2). tion system was the invention of the concept of lean Flexible order and supply behavior is actually made management,primarily in manufacturing (Womack possible by new technologies,primarily through the real- et al.,1990;Harrison,1997).One of the main premises time exchange of information.Because of information of lean management is eliminating inventories and and communication technologies,firms are able to order organizing materials supply strictly on demand,replac- from point-of-sale,to adjust inventories to meeting de- ing the former storage and stock keeping of inventory. mand (if not to eliminate them entirely)and to reduce During the 1980s,the application of this"principle of redundancy almost totally.Features such as electronic flow"permitted the reduction of inventories in time- data interchange(EDI).automated product flow in dis- sensitive manufacturing activities from several days' tribution centers (DCs)and warehouses,or the recent worth to several hours.Much of these efforts initially computer based tracing-and-tracking systems-which took place within the factory,while supply and output offer on-line control of shipped parcels via the web-are flowed as batches from suppliers and to distributors. primary sources of enormous productivity gains over last High rack storages,which later became automatically two decades(Fig.3).They still seem to be more important driven,or the internal movement of packages by flat than innovations associated with the upcoming electronic robots were early expressions of logistical engineering. commerce(Hesse,2002a;OECD/ECMT,2001). Initially,logistics was an activity divided around the While cycle time requirements substantially decreased supplying,warehousing,production and distribution from the 1960s to 1980s,this came at the expense of functions,most of them being fairly independent from growing logistics costs,notably inventory.From that the other.With the new organization and management point on,the major achievements were related to pro-subcontractors (Dicken and Thrift, 1992; Gertler, 1992; Hudson, 2001). The supply chain bundles together all this by information, communication, cooperation, and, last but not least, by physical distribution (Bowersox et al., 2000). Globalization means that the spatial frame for the entire economy has been expanded, implying the spatial expansion of the economy, more complex global economic integration, and an intricate network of global flows and hubs (cf. Dicken, 1998; Held et al., 1999; Knox and Agnew, 1998). Logistics thus developed against the background of long-term structural change in economy, technology and society affecting all major industrialized countries (IMF, 2001). These interrelated changes com￾prise sectoral and structural changes, mainly the rise of service economies, the increasing share of goods with high value and low weight, consumerism, the upcoming high tech and knowledge based sectors (Castells, 1996); they also include a new political framework, namely the policies of deregulation and liberalization that were effective for the US in the late 1970s and early 1980s, and for Europe since the introduction of the Single European Market in 1992 (Knowles and Hall, 1998). These policies are now also being adopted by many developing countries, with varied success. The principles of modern logistics can be traced back to Taylor (1947), the conceptual creator of fordism. Although his ideas were related to improving efficiency within the factory by organizing the worker’s tasks along an assembly line, the temporal dimensions intro￾duced, such as sequence, duration, schedule, rhythm, synchronization and time perspective are of high sig￾nificance to logistical management. What Taylor’s principles of management were able to achieve within the factory in terms of productivity improvements, logistics are able to achieve between elements of the supply chain: a system of integrated factories. A mile￾stone that marked rapid changes in the entire distribu￾tion system was the invention of the concept of lean management, primarily in manufacturing (Womack et al., 1990; Harrison, 1997). One of the main premises of lean management is eliminating inventories and organizing materials supply strictly on demand, replac￾ing the former storage and stock keeping of inventory. During the 1980s, the application of this ‘‘principle of flow’’ permitted the reduction of inventories in time￾sensitive manufacturing activities from several days’ worth to several hours. Much of these efforts initially took place within the factory, while supply and output flowed as batches from suppliers and to distributors. High rack storages, which later became automatically driven, or the internal movement of packages by flat robots were early expressions of logistical engineering. Initially, logistics was an activity divided around the supplying, warehousing, production and distribution functions, most of them being fairly independent from the other. With the new organization and management principles, firms were following a more integrated ap￾proach, thus responding to the upcoming demand for flexibility without raising costs. At the same time, many firms took advantage of new manufacturing opportu￾nities in developing countries. As production became increasingly fragmented, activities related to its man￾agement were consolidated. Spatial fragmentation be￾came a by-product of economies of scale in distribution. In the 1990s, with the convergence of logistics and information technologies, this principle was increasingly applied to the whole supply chain, particularly to the function of distribution. In some highly efficient facili￾ties, the warehousing function went down as far as 15 min worth of parts in inventory. It is now being intro￾duced in service functions such as wholesale and retail where inventory in stores are kept at a minimum and resupplied on a daily basis. Whereas contemporary logistics was originally dedi￾cated to the automation of production processes, in order to organize industrial manufacturing as efficiently as possible, the subsequent modernization of logistics can been characterized by an increasing degree of inte￾gration. This trend was already on the way in the 1960s, as a key area for future productivity improvements (Bowersox et al., 1968). However, only with the imple￾mentation of modern information and communication technologies did this assumption become possible. They allow for the integrated management and control of information, finance and goods flows and made possible a new range of production and distribution systems (Abernathy et al., 2000). Step by step, and according to improvements in information and communication technologies, the two ends of the assembly line became integrated into the logistics of the supply chain: the timely supply of raw materials and components from outside, and the effective organization of distribution and marketing (Fig. 2). Flexible order and supply behavior is actually made possible by new technologies, primarily through the real￾time exchange of information. Because of information and communication technologies, firms are able to order from point-of-sale, to adjust inventories to meeting de￾mand (if not to eliminate them entirely) and to reduce redundancy almost totally. Features such as electronic data interchange (EDI), automated product flow in dis￾tribution centers (DCs) and warehouses, or the recent computer based tracing-and-tracking systems––which offer on-line control of shipped parcels via the web––are primary sources of enormous productivity gains over last two decades (Fig. 3). They still seem to be more important than innovations associated with the upcoming electronic commerce (Hesse, 2002a; OECD/ECMT, 2001). While cycle time requirements substantially decreased from the 1960s to 1980s, this came at the expense of growing logistics costs, notably inventory. From that point on, the major achievements were related to pro- 174 M. Hesse, J.-P. Rodrigue / Journal of Transport Geography 12 (2004) 171–184