M.Hesse,J.-P.Rodrigue I Journal of Transport Geography 12(2004)171-184 175 1960s Demand Forecasting 1980s Purchasing Materials Requirements Planning Management Production Planning 1990s Manufacturing Inventory 2000s Warehousing Materials Handling Supply Chain Logistics Management Packaging Inventory Distribution Planning Physical Order Processing Information Technology Distribution Transportation Marketing Customer Service Strategic Planning Fig.2.Evolution of logistical integration,1960-2000 20 40 plier,the producer,the distributor (e.g.a wholesaler,a 18 Logistics Costs (GDP) freight forwarder,a carrier),the retailer,the end con- 口Imventory Cos克%GDP) 35 Cycle Time Requirements(days sumer,all of whom represent important players and 30 particular interests (Bovet et al.,2000;Bowersox et al., 25 2000).Compared with the former,more traditional shape 20 of the freight transport system,the evolution of supply chain management and the related emergence of the logistics industry is mainly characterized by four features: First,a fundamental restructuring of goods merchan- dising by establishing integrated supply chains with 1960s 1970s 1980s 1990s 2000s integrated freight transport demand. Fig.3.Logistical improvements,manufacturing sector,1960-2000. Second,whereas transport was traditionally regarded as a tool for overcoming space,logistics is critical in terms of time.This was achieved by shifts towards vertical integration,namely subcontracting and out- ductivity gains in distribution,accompanied by a sourcing,including the logistical function itself(Har- reduction of cycle time requirements,but as impor- vey,1989). tantly,of inventory costs.Another important require- Third,according to macro-economic structural ment was containerization,which conferred substantial changes,demand-side oriented activities are becom- flexibility to production systems in addition to the ing predominant.While traditional delivery was pri- container being its own storage unit.The expansion of marily managed by the supply side,current supply classical infrastructure such as highways,terminals and chains are increasingly managed by demand. airports was also essential for the development of Fourth,the logistics services are becoming complex modern logistics.The remarkable growth of freight and time-sensitive to the point that many firms are transport could not have happened without extensive now sub-contracting parts of their supply chain man- networks of freeways for regional and long-distance agement to third-party logistics providers.These pro- traffic,just as the railway system had provided the basis viders benefit from economies of scale and scope by for industrialization decades earlier. offering integrated solutions to many freight distribu- The flow-oriented mode of corporate management tion problems and organization currently affects almost every single activity within the entire process of value creation.The core component of materials management is the supply 3.The core geographical dimensions of logistics chain,the time-and space-related arrangement of the whole goods flow between supply,manufacturing,dis- The structural change in distribution and logistics tribution and consumption.Its major parts are the sup- has distinct geographical dimensions,investigated byductivity gains in distribution, accompanied by a reduction of cycle time requirements, but as impor￾tantly, of inventory costs. Another important require￾ment was containerization, which conferred substantial flexibility to production systems in addition to the container being its own storage unit. The expansion of classical infrastructure such as highways, terminals and airports was also essential for the development of modern logistics. The remarkable growth of freight transport could not have happened without extensive networks of freeways for regional and long-distance traffic, just as the railway system had provided the basis for industrialization decades earlier. The flow-oriented mode of corporate management and organization currently affects almost every single activity within the entire process of value creation. The core component of materials management is the supply chain, the time- and space-related arrangement of the whole goods flow between supply, manufacturing, dis￾tribution and consumption. Its major parts are the sup￾plier, the producer, the distributor (e.g. a wholesaler, a freight forwarder, a carrier), the retailer, the end con￾sumer, all of whom represent important players and particular interests (Bovet et al., 2000; Bowersox et al., 2000). Compared with the former, more traditional shape of the freight transport system, the evolution of supply chain management and the related emergence of the logistics industry is mainly characterized by four features: • First, a fundamental restructuring of goods merchan￾dising by establishing integrated supply chains with integrated freight transport demand. • Second, whereas transport was traditionally regarded as a tool for overcoming space, logistics is critical in terms of time. This was achieved by shifts towards vertical integration, namely subcontracting and out￾sourcing, including the logistical function itself (Har￾vey, 1989). • Third, according to macro-economic structural changes, demand-side oriented activities are becom￾ing predominant. While traditional delivery was pri￾marily managed by the supply side, current supply chains are increasingly managed by demand. • Fourth, the logistics services are becoming complex and time-sensitive to the point that many firms are now sub-contracting parts of their supply chain man￾agement to third-party logistics providers. These pro￾viders benefit from economies of scale and scope by offering integrated solutions to many freight distribu￾tion problems. 3. The core geographical dimensions of logistics The structural change in distribution and logistics has distinct geographical dimensions, investigated by Demand Forecasting Purchasing Requirements Planning Production Planning Manufacturing Inventory Warehousing Materials Handling Packaging Inventory Distribution Planning Order Processing Transportation Customer Service Strategic Planning Materials Management Physical Distribution Logistics Supply Chain Management Information Technology Marketing 1980s 1990s 2000s 1960s Fig. 2. Evolution of logistical integration, 1960–2000. 0 2 4 6 8 10 12 14 16 18 20 1960s 1970s 1980s 1990s 2000s % of GDP 0 5 10 15 20 25 30 35 40 Days Logistics Costs (% GDP) Inventory Costs (% GDP) Cycle Time Requirements (days) Fig. 3. Logistical improvements, manufacturing sector, 1960–2000. M. Hesse, J.-P. Rodrigue / Journal of Transport Geography 12 (2004) 171–184 175