Emerald

The decade of the 1980s has been witness to a long period of stable, sustained economic growth in the American economy, with moderate inflation, favourable interest rates, and steady growth in GNP. The decade has been remarkably free of the economic turmoil that marred the 1970s ‐ double digit inflation, double digit prime interest rates, the energy crisis. Nevertheless, the last nine years have brought with them profound changes in the national economy and in the global marketplace which will radically alter the way a modern enterprise does business. Some of the most significant changes will occur in the firm's logistics processes and practices. These changes will present challenges, and opportunities, to every firm in every industry. The Fortune 500 of the year 1999 will consist of those companies who understand the challenges and seize the opportunity which they represent ‐ the opportunity to fashion a logistics system which is tuned to the realities of the future.

In most developed economies the costs of logistics management are steadily growing and account for an increasing proportion of the gross national product. Logistics costs have become an important part of the added value of products and logistics management is increasingly regarded as an important weapon in the international competitive struggle, in particular by large market‐oriented companies. The emphasis in marketing strategies is shifting from product and price to promotion and place. Rapidly changing customer demands have an increasing effect on company policies. Reduction of product life cycles and assortment expansion will lead to faster development and delivery of new products and to smaller‐sized and more frequently placed delivery orders. Advancing technology will cause production to require more focus. Customers are becoming more demanding and manufacturers have to react faster to changing demand on the part of both private consumers and industrial customers. This requires enormous flexibility, which will be increasingly aimed at conquering and securing sales potential in the liberalized European market. Successful companies will focus on core activities. Activities other than core activities, but serving them, will have to be outsourced.

Currently, efforts in the e‐grocery business focus on improving the purchase transaction and physical distribution of goods. However, simply improving ordering and fulfillment does not make e‐grocery shopping a viable competitor to the current supermarket business model. To become a profitable growth business, the e‐grocers have to offer their customers more value. It is not enough to offer customers a range of physical products. A range of new meaningful services is also needed. This article investigates how such new, breakthrough services can be developed. A framework for systematically examining customer demand and identifying corresponding services is presented. The importance of the e‐grocer being able to offer the right mix of services to meet the customers' individual and changing needs is demonstrated. Concrete examples of both new services and a service mix are described.

Virtually every substantial business devotes a good deal of effort to forecasting demand. There are of course sound reasons for this. Companies require long term projections for capacity planning, for product development and for other strategic purposes. Medium term data are needed for tactical planning for financial, marketing and personnel. The value of short term forecasts, essentially used for production planning, is more problematical. This activity does not add any apparent tangible value and, moreover, is almost inevitably doomed to failure. Attempts to improve forecasts, a very common activity, often merely serve as tactics to divert management's attention from far more critical problems in a product's value system. An alternative approach is to develop value systems in which production forecasts are no longer needed.

It is evident from examples such as Dell that successful shapers of the supply chain really do change the game, but how can your company do it? Value reengineering is a new approach for how a company can systematically implement breakthrough solutions for its customers. The key is finding the right value offering point in the customer:s demand chain. A company can then carve‐out a new business model that offers better value to the customer in a way that also helps lower costs.

Customer demands on manufacturers and retailers are increasing relentlessly. Spurred by the Internet's “click it and get it” value proposition, a growing number of consumers and business buyers want customized products, convenient ordering, and rapid fulfillment. Delivering against these rising expectations is not easy, however. This is especially true for traditional or incumbent companies that have additional cultural obstacles to overcome. Companies have mastered the challenges of speed, convenience, and reliability and are gaining competitive advantage.

The traditional hierarchical model of command and control that served through the U.S. Industrial Revolution has undergone significant change in the past decade. Part of the changes have been prompted by global alliances of business partners. Other changes are the result of new enabling information technology that dramatically alters the role of information in the corporation. Still other changes are the result of new cycle‐time‐to‐market metrics on the part of buyer and seller. The re‐integration of the channel will present significant, new challenges and opportunities to the corporate logistics function. The logistics function of the firm will provide the ideal “boundary spanning” role to re‐integrate and position the firm for global competitiveness in the 21st century. However, new skill, new knowledge bases, new technology and new performance metrics will be required to meet the objective.