M.Hesse,J.-P.Rodrigue I Journal of Transport Geography 12(2004)171-184 173 Manufacturing Requirements The purpose of the paper consequently is to assess Materials Management how geography is related to logistics and how logistics enforces a specific geography of production/distribution Induced Logistics Derived by exploring the integrated transport demand function. Demand (Integrated Demand) Demand It will first investigate the processes that have led to the integration of different functions into what has become Physical Distribution Mobility Requirements known as supply chain management.Second,its under- lying geographical dimensions are introduced,namely Fig.1.Logistics and integrated transport demand. the core concepts of flows,nodes and networks,which supply chain management has substantially modified. by dealing with a wide array of parts for assembly Last,spatial impedance (friction)factors linked to and raw materials,including packaging(for transport logistics are discussed and retailing)and,ultimately,recycling discarded commodities.2All these activities are assumed to be inducing physical distribution demands. 2.The evolution of logistics The close integration of PD and MM through logis- Although logistics were initially applied to military tics is blurring the induced/derived demand distinction. operations,its most significant impact is being felt The reciprocal relationship between the induced trans- through the functions of production.distribution and port demand function of physical distribution and the consumption(Rodrigue and Slack,2002).The exchange derived demand function of materials management is of goods is a constant feature of human economic thus considered as the integrated transport demand of activity.It was once essential for the rise of the mer- logistics (Fig.1).This implies that distribution,as al- cantile economy in medieval Europe(Braudel,1982)and ways,is derived from materials management activities became a large scale activity during the industrial rev- (namely production),but also,that these activities are olution.The location of industrial activity and thus the coordinated within distribution capabilities.Production, geography of manufacturing in general evolved with distribution and consumption are thus difficult to sep- respect to accessibility improvements that were partic- arate. ularly offered by railroads (which were then predomi- The more connected the different actors along a nantly freight related).Vice versa,every "long wave"in supply chain are,the harder it is to make a clear dis- the process of industrialization embodies distinct tinction between PD and MM as distribution channels transportation orientations and appropriate infrastruc- extend from suppliers to consumers and as responsibility ture requirements (Hayter,1997,27).This was true for for transport and warehousing is shared between man- the railroad in the fordist economy,as it is for trucking ufacturers,wholesalers and retailers(McKinnon,1988). and air freight more recently.The origins of the modern Logistics must be consistent with the products it sup- distribution sector go back to the emergence of the ports as customers tend to not place any difference be- capitalist economy,the development of specific modes tween a product and the distribution system that of industrial production and the unfolding of a partic- supplies it.Consequently,it is becoming increasingly ular division of labor.This created a distinct"sphere of difficult to consider transportation solely as a derived circulation",situated between production and con- demand,or industrial production,manufacturing and sumption (Marx.1939/1953).To a certain extent,cir- consumption solely as factors inducing transport de- culation allowed for the transition from use-value to mand.We thus argue that the classic transport geogra- exchange-value,and thus made possible the large-scale phy concept of derived freight demand has been blurred capitalization of commodities.Mass distribution and by the diffusion and adaptation of logistics.Manufac- marketing became incorporated in the practice of turing and mobility requirements are both embedded as modern management (Chandler,1977)and have been what is being produced,a part,or a finished product, significant factors of wealth generation. has to be moved at a similar rate along the supply chain. The organization and technology of modern distri- This paradigm shift leaning on supply chain manage- bution are embedded in a changing macro-and micro- ment,materials flow management and freight trans- economic framework.It can be roughly characterized by portation thus requires the elaboration of its own the terms of flexibilization and globalization.Flexi- transport geography bilization represents,far beyond the narrow interpreta- tion of"flexible specialization",a highly differentiated, strongly market-and customer-driven mode of creating added-value.Contemporary production and distribu- 2This is often labeled as reverse distribution,or integrated repair tion is no longer subject to single-firm activity,but and return (Rodrigue et al.,2001). increasingly practiced in networks of suppliers andby dealing with a wide array of parts for assembly and raw materials, including packaging (for transport and retailing) and, ultimately, recycling discarded commodities. 2 All these activities are assumed to be inducing physical distribution demands. The close integration of PD and MM through logis￾tics is blurring the induced/derived demand distinction. The reciprocal relationship between the induced trans￾port demand function of physical distribution and the derived demand function of materials management is thus considered as the integrated transport demand of logistics (Fig. 1). This implies that distribution, as al￾ways, is derived from materials management activities (namely production), but also, that these activities are coordinated within distribution capabilities. Production, distribution and consumption are thus difficult to sep￾arate. The more connected the different actors along a supply chain are, the harder it is to make a clear dis￾tinction between PD and MM as distribution channels extend from suppliers to consumers and as responsibility for transport and warehousing is shared between man￾ufacturers, wholesalers and retailers (McKinnon, 1988). Logistics must be consistent with the products it sup￾ports as customers tend to not place any difference be￾tween a product and the distribution system that supplies it. Consequently, it is becoming increasingly difficult to consider transportation solely as a derived demand, or industrial production, manufacturing and consumption solely as factors inducing transport de￾mand. We thus argue that the classic transport geogra￾phy concept of derived freight demand has been blurred by the diffusion and adaptation of logistics. Manufac￾turing and mobility requirements are both embedded as what is being produced, a part, or a finished product, has to be moved at a similar rate along the supply chain. This paradigm shift leaning on supply chain manage￾ment, materials flow management and freight trans￾portation thus requires the elaboration of its own transport geography. The purpose of the paper consequently is to assess how geography is related to logistics and how logistics enforces a specific geography of production/distribution by exploring the integrated transport demand function. It will first investigate the processes that have led to the integration of different functions into what has become known as supply chain management. Second, its under￾lying geographical dimensions are introduced, namely the core concepts of flows, nodes and networks, which supply chain management has substantially modified. Last, spatial impedance (friction) factors linked to logistics are discussed. 2. The evolution of logistics Although logistics were initially applied to military operations, its most significant impact is being felt through the functions of production, distribution and consumption (Rodrigue and Slack, 2002). The exchange of goods is a constant feature of human economic activity. It was once essential for the rise of the mer￾cantile economy in medieval Europe (Braudel, 1982) and became a large scale activity during the industrial rev￾olution. The location of industrial activity and thus the geography of manufacturing in general evolved with respect to accessibility improvements that were partic￾ularly offered by railroads (which were then predomi￾nantly freight related). Vice versa, every ‘‘long wave’’ in the process of industrialization embodies distinct transportation orientations and appropriate infrastruc￾ture requirements (Hayter, 1997, 27). This was true for the railroad in the fordist economy, as it is for trucking and air freight more recently. The origins of the modern distribution sector go back to the emergence of the capitalist economy, the development of specific modes of industrial production and the unfolding of a partic￾ular division of labor. This created a distinct ‘‘sphere of circulation’’, situated between production and con￾sumption (Marx, 1939/1953). To a certain extent, cir￾culation allowed for the transition from use-value to exchange-value, and thus made possible the large-scale capitalization of commodities. Mass distribution and marketing became incorporated in the practice of modern management (Chandler, 1977) and have been significant factors of wealth generation. The organization and technology of modern distri￾bution are embedded in a changing macro- and micro￾economic framework. It can be roughly characterized by the terms of flexibilization and globalization. Flexi￾bilization represents, far beyond the narrow interpreta￾tion of ‘‘flexible specialization’’, a highly differentiated, strongly market- and customer-driven mode of creating added-value. Contemporary production and distribu￾tion is no longer subject to single-firm activity, but increasingly practiced in networks of suppliers and 2 This is often labeled as reverse distribution, or integrated repair and return (Rodrigue et al., 2001). Logistics (Integrated Demand) Materials Management Physical Distribution Derived Demand Induced Demand Manufacturing Requirements Mobility Requirements Fig. 1. Logistics and integrated transport demand. M. Hesse, J.-P. Rodrigue / Journal of Transport Geography 12 (2004) 171–184 173