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Emerging distribution systems incentral and Eastern Europe

Implications from two case studies

Harri LorentzTurku School of Economics, Turku, Finland

Chee Yew WongSchool of Management, Cranfield University, Cranfield, UK, and

Olli-Pekka HilmolaKouvola Research Unit, Lappeenranta University of Technology,

Kouvola, Finland

Abstract

Purpose The purpose of the research is to shed light on the evolution of distribution structures andits consequent implications for supply chain management (SCM) in the context of the emergingmarkets of Central and Eastern Europe (CEE).

Design/methodology/approach A structured literature review followed by two case studies,which combine qualitative and quantitative analysis. Mainly in-depth interviews were used, withcompany sales data analysis in terms of variation and forecast accuracy.

Findings It was found that CEE distribution structures are overlapping, and along complextraditional structures there exists a possibility for a more direct approach. This modernkey-account approach improves supply chain performance, mainly due to echelon elimination and

information sharing. The case studies also illustrate that supply chain demand distortionoriginating practices create uncertainty in demand, even in the case of modern key accounts. Thefindings therefore suggest that general SCM approaches of the West are evident and appropriatealso in the East.

Research limitations/implications Owing to the limited number of case studies, this research isconsidered exploratory. The presented two case studies are essentially illustrative examples of thedistribution operations of two international companies in CEE markets.

Practical implications For practitioners, the two case studies provide important insight on thenature of alternative distribution structures in CEE, and what the level of forecast accuracy and thedemand fluctuation may be expected. It is proposed that the emerging opportunities for supply chainpartnership development should be carefully reviewed.

Originality/value The paper draws upon real-life data from emerging CEE markets with anapproach that is not commonly used in distribution and SCM studies on CEE.

Keywords Distribution management, Demand forecasting, Economic growth, Europe, RussiaPaper type Case study

IntroductionOne of the arguably great challenges of supply chain management (SCM) is the lack ofdemand visibility experienced by the members of the chain (Smaros et al., 2003; Chen,1998). As is often the case, vendors are left to use the factory shipments based on

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Received March 2007Revised June 2007Accepted June 2007

International Journal of PhysicalDistribution & Logistics ManagementVol. 37 No. 8, 2007pp. 670-697q Emerald Group Publishing Limited0960-0035DOI 10.1108/09600030710825702


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customer orders as the demand input data, which leads to the delayed and distortedpicture of the actual end customer or consumer demand. The causes, effects and someof the remedies are well-known and identified in the Bullwhip effect related literature(Forrester, 1961; Ackere et al., 1993; Lee et al., 1997; Metters, 1997; Fransoo and

Wouters, 2000; Towill, 2005; Hejazi and Hilmola, 2006).As has been pointed out by McCullen and Towill (2002), the remedies for Bullwhip

effect reduction require material flow considerations, such as the implementation ofcontrol systems, time compression, information transparency, and echelon eliminationprinciples. However, in less-developed business environments, such as many of theemerging markets, the above-mentioned remedies may be difficult to implement andmanage. Typically, the emerging markets imply a greater level of operationaluncertainty (Mascarenhas, 1982), which for SCM is one of the most challenging andimportant problems (Sabri and Beamon, 2000). The supply chain and the distributionsystem structure may have significant effects on the ability to wield control actionsand collaborate for information sharing, and thus reduce the Bullwhip effect and

uncertainty in general in supply chain operations; considerations that are indeedrelevant in the emerging market environment. Further, in transitional emergingmarkets, challenges related to poor logistics infrastructure (Waters, 1999b), vagueinstitutional environment on, for example, ownership rights and foreign directinvestment (North, 1990; Intriligator, 1996), gaps in management competencies(Handfield and Withers, 1993), and other hereditary baggage of the commandeconomy, may imply difficulties for SCM implementation.

In this paper, an effort is made to describe the development of distribution systemsin selected Central and Eastern European (CEE)[1] countries, and to determine theconsequent implications to SCM, as the evolutionary processes in these markets arebound to have important operational effects on foreign companies on both the strategicand the tactical level (Meyer and Gelbuda, 2006). We describe the emergence of modern

key-account distribution structures, which according to theory-based a prioriassumptions on echelon elimination and information sharing, should improvesupply chain performance in terms of lower demand amplification. In short, ourresearch questions are the following:

RQ1. How does the distribution system and its development affect supply chainmanagement in the emerging markets and specifically in the CEE?

RQ2. How the utilisation of modern/direct vs traditional/indirect distributionchannels benefit companies operating in emerging markets and specifically inthe CEE?

The paper is structured as follows: we first consider the literature on distribution

systems and channels, and specifically the evolution of distribution structures. Weproceed to present a structured review of CEE-related research on distribution, supplychain management and logistics. The literature-based conclusions are followed by anote on research environment, highlighting the significance of the CEE forinternationalising consumer good companies. The empirical part provides twocompany case studies on distribution operations in the CEE, with special emphasis ondemand dynamics. As appropriate, discussion, conclusions and several propositionsbring the paper to its end, where we also provide suggestions for further research.

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Literature reviewEvolution of distribution structuresDistribution systems and channel structures have been part of the marketing researchfor decades (Wilkinson, 2001). Many early researchers contributed to the study of

interfirm relationships and networks in marketing channels, elaborating on suchissues as productivity measures in distribution, economic entities and their functions inthe marketing channel, the principle of postponement, channel structure and design(Alderson, 1948, 1950; Alderson and Cox, 1948; Bucklin, 1965; Mallen, 1970, 1973). Thepresented ideas provided a foundation for research on distribution, and they wereindeed further developed and refined during the following decades. Both practicallyand theoretically oriented-tools and models have been presented in the more recentacademic literature for the purposes of distribution channel and network design (e.g.Mourits and Evers, 1995; Jayaraman, 1998; Lalwani et al., 2006). For example, Neveset al. (2001) introduced a model that provides practical guidelines for a channelplanning process with a classification of detailed distribution functions in four flows,namely the product and services flow, communication flow, information flow, andpayments and financial flow; an approach that underlines the importance oftransparency and collaboration to streamline processes.

With the increasingly dynamic nature of the world and national economies, themultinational enterprises (MNE) are constantly changing their location andownership strategies to better fit the changing characteristics of environmentsand markets (Buckley and Ghauri, 2004). It is paramount for internationalmarketers to understand the structure and functioning of market-specific distributionsystems in order to succeed in their marketing operations. Much of theimplementation of, for example, supply chain management concepts depends onthe market-specific institutions and information technology diffusion (Boubekri,2001). For example, the Japanese and other Asian distribution systems, with intricate

structures and functions unknown to many foreign business managers, have beenaddressed in terms of research (Kuribayashi, 1991; Min, 1996; Luk, 1998; Lohtia andSubramaniam, 2000; Chung, 2001). Fittingly, it has been concluded that the channelsof distribution in existence in a specific national market are a result of culture andtradition (Jain, 1996).

Extensive research has been conducted on the explanation of the distributionchannel structure and system evolution. According to Mallen (1975, 1977), thestructure of distribution channels is a reflection of an economys level ofdevelopment. The channel structures evolve from little specialisation betweendistribution and non-distribution functions, via separation of the same among firms,towards a system where specific types of distributors, wholesalers, agents andretailers perform their distinctive functions. Further, the development of the

economy in general leads towards vertical integration, and more direct distributionchannels emerge as a result, as middlemen are left to redefine their roles or exit theindustry. Further, Mueller et al. (1993) present a review of distributiondevelopment-related research, resulting in a brief debate on the coherence anddisjointedness of distribution system evolution literature (Savitt, 1994; Mueller andBaron, 1994). In the original paper, Mueller et al. (1993) argue that generalisationsabout distribution systems are challenging as many contextual variables fromeconomic, social and political spheres influence the system. More recently,

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Quinn and Murray (2005) identify and elaborate comprehensively on literaturestreams that can be utilised in the interpretation of channel evolution, namely theeconomizing tradition often building on the theory of transaction costs (Williamson,1979; Frazier, 1999), power dependency explanation drawing, for example, on the

work of Porter (1980), institutional explanation with strong orientation on theenvironments (North, 1990; Grewal and Dharwadkar, 2002), and evolutionaryexplanation with variation, selection and retention processes driving change(Aldrich, 1999; Davies, 1998). Quite relevant are the conclusions of Coe and Hess(2005) on the supply network restructuring effects of large multinational retailexpansion to emerging markets, where polarisation of supply systems for thebenefit of the large retailers is likely to occur, with developments towards the use ofcentralised supply, implementation of logistical system upgrade, and shortening ofsupply network (echelon elimination).

In conclusion, we may argue that general economic development, diverseenvironmental variables, relative bargaining power of sectors in the consumer goodsvalue chain, and internationalising firms as system catalysts, have importantimplications to the evolution and consequent structure of the distribution systems inspecific national markets. For example, in Western Europe, the evolution of industriesand the increasing competitive pressures have determined the wielders of marketpower in the consumer goods supply chains, where large retail chains have increasingpower as the orientation for consumer-centred operations grow and new technologiesare implemented (Clarke, 2000; Duke, 1992).

Foreign companies entering new markets are forced to plan their supply chainoperations and the facilitating supplier-customer relationships in the givenmarket-specific framework, either through adaptation or active development andimplementation of the globally-preferred distribution channel structures, i.e. throughstandardisation (Canning and Hanmer-Lloyd, 2002; Levitt, 1983; Ryans et al., 2003). A

companys distribution structure plays a crucial role in determining the level ofdemand amplification and uncertainty. As evolutionary processes produce distributionstructures that allow for: more direct distribution channels (echelon elimination); andthe formation of partnerships (Lambert et al., 1996) for information transparency,control systems implementation and time compression-oriented process redesign, thenSCM implementation projects take-off more broadly in the emerging market industries,with the condition of sufficient IT proliferation.

In many cases, operational compromises have to be made that do not facilitate thereduction of demand variability and the experienced Bullwhip effect.

Distribution and supply chain management in the emerging markets of CEEThis section reviews the distribution, supply chain management and logistics-related

research specifically targeting the emerging markets of the CEE. The aim is to provideinsight to the distribution and SCM-related operational challenges in the area. Anattempt was made to cover as widely as possible the research work conducted so far,by using various available electronic journal databases (e.g. Emerald Fulltext,ABI/INFORM). The CEE emerging markets were operationalised by the means of theSP emerging markets indices (IFCG Composite and Frontier Composite; Standard &Poors, 2006), and thus included the following countries: Bulgaria, Croatia, CzechRepublic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russia, Slovakia,


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Slovenia and Ukraine. Articles were further searched in focused journals (e.g. Journalof East-West Business), and identified as a result of references from colleagues.In addition to the findings and results, the interest on the reviewed work isconcentrated on the target era, industry, and geographic context of the articles (see

Appendix).Based on the review presented in the Appendix, only some CEE countries have been

targeted with distribution and supply chain management research. Two journals standout as the major forums for the CEE specific distribution and supply chainmanagement knowledge, namely the International Journal of Retail and DistributionManagement (11 articles), and the International Journal of Physical Distribution andLogistics Management (six articles). The academic research on our focus subject in theCEE context can roughly be divided into three time periods:

(1) research targeting the command economy (pre-transition) era;

(2) research targeting issues after the launch of the economic transition period inthe early 1990s (early post-transition era); and

(3) research targeting current and post 1998 financial crisis issues in Russia, andthe new millennium/EU accession preparation era in the other CEE countries(late post-transition).

It is easily perceivable that the majority share of the research has been concentrated onthe early post-transition period with historical reflections on the command economysystem, describing the effects of transitional disruptions, restructuring, deregulationand privatisation on the logistics function in general, as well as distribution and supplychain management in specific sectors. The historical heritage, or even burden, isdescribed in many of the contributions (Davies and Schmidt, 1991; Waters, 1999b).

The 1998 financial crisis in Russia, which significantly affected the consumer goodssector through inflation and the domestic incumbents regaining of competitiveness, is

highly significant in the countrys recent economic history. A notable fact is that onlythree articles describe the distribution-related issues in the post-crisis environment inRussia (Menkhaus et al., 2004; Roberts, 2005; Lorentz et al., 2006), which to someforeign companies meant reduced levels of operations or total withdrawal fromthe market. Some notable late post-transition research addresses the focus issues inthe other CEE, mainly concentrating on the logistical role and development of certaincountries (such as the Baltic States) after their accession to the EU (Spens et al., 2004;Naula and Ojala, 2007). Otherwise, fresh research on current issues is scarce: Russiaand Poland have been the major targets of inquiry, while the other first wave EUentrants, such as Hungary and Czech Republic have attracted less interest. This is evenmore pronouncedly the case with the second wave EU entrants of Romania andBulgaria. Intuitively, one may perhaps conclude that economic significance hassomething to do with the level of research interests.

In terms of target industries, the focus has been very much on retail business(Krasny, 1992; James, 1992; Roberts, 2005), and food supply chains (Morton, 1993b;Menkhaus et al., 2004), with emphasis on related retail distribution (Taylor, 1994;Dawson and Henley, 1999). Also, general logistics issues andtransportation-industry-specific issues dominate, especially in the case of Poland,where privatisation and deregulation of the industry has opened new opportunities forentrepreneurs (Rydzkowski, 1993), and additionally, EU membership is perceived as a

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catalyst for modernisation of infrastructure and logistics systems (Spillan et al., 2003;Kisperska-Moron, 2005). New political-economic geography in the CEE area meansimplications to international logistics operations, and, for example the role of Lithuaniaas a logistics gateway has been investigated by Jauernig and Roe (2001). The Baltic

States as an aggregate have been recently examined in terms of their transport sectordevelopment and changing role in the EU-Russia logistics facilitation (Naula and Ojala,2007; Kovacs and Spens, 2006).

In general, the rate of evolutionary change in these markets has been tremendous,causing uncertainty and complexity to the incumbent foreign companies. It is clear thatthe heritage of the centralised planning oriented command economy, with focusedorientation on manufacturing, on the expense of logistics infrastructure and retaildevelopment, caused significant problems to consumer good distribution in thepost-transition environment (Rodnikov, 1994; Taylor, 1994; Waters, 1999b).Complicated and inefficient supply chain structures emerged in order to cope withthe general fragmented nature of industries in the consumer good value chain

(Menkhaus et al., 2004), and the high transaction costs arising from the institutionalvoid generated during long years of centralised planning and the transition period. Inthe wake of the purchasing-power-induced development trends, the bargaining powerin the supply chain has been shifting towards the retail sector (Waters, 1999a; Muelleret al., 1993) as for example, foreign entrants leverage their bargaining power towardsthe suppliers who have been used to dictating the rules of the game (Roberts, 2005).

During the early years of the transition, the comprehension of logistics and supplychain management concepts was poor, with trained staff and management beingdifficult to find for the facilitation of supply chain operations (Rydzkowski, 1993;Rydzkowski and Spraggins, 1994). Although, this may be true, in general, James (1992)presents a case study on successful domestic retail operation based on a good

understanding of local business realities. Still, confirming the need for further researchon SCM in the transitional emerging markets, Kovacs and Spens (2006) argue for thesustained efforts for the introduction of supply-chain orientation in, for example, theBaltics; thus enabling the advancement from the mere facilitation of transport to amore collaborative mode in logistics.

As was noted earlier, the consumer goods sector has received a reasonablyhigh-share of the attention in CEE-related distribution and SCM research, which itundoubtedly deserves. Most of it has targeted the early transition period, leaving thelater developments largely uncovered. In terms of Russia, the freshest research targetsfood retailing and even some supply chain issues. As a lion share of the reviewedresearch is descriptive in nature, it might be reasonable to call for research that fully

utilises the prospects for theory development based on empirical distribution and SCMresearch in the CEE. Based on the international business-specific argumentation ofMeyer and Gelbuda (2006), SCM research in the CEE context could address, forexample, the interaction of environmental change with firms supply chain processes,addressing, for example, such issues as sourcing, distribution, and network design.Furthermore, the issue of adapting a firms SCM-specific resources from maturemarkets to transitional emerging markets (Meyer and Peng, 2005) would be anotherbeneficial research approach.


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CEE retail developmentIn the case of the consumer goods sector, the opportunities in the emerging markets forinternationalisation and foreign direct investment (FDI) can be examined by means ofthe annual Global Retail Development Index (GRDI), published by Kearney (2006).

Although focusing specifically on the retail sector, the index measures, for example,such variables as country and business risk, retail sales per capita, population, andbusiness efficiency, which are highly relevant for all the consumer goods supply chainincumbent firms, as they significantly affect the distribution system functionality andstructure. Currently, the countries of the CEE dominate the list with five out of the tenmost attractive retail markets. During the last decade, the shift of growth andopportunity has been from Asia to CEE as Table I presents.

It is evident that a decade ago Asian countries held similar significance in terms ofthe most attractive markets, but the current situation is rather CEE-centric. Russia(pop. 147 million) topped the list of attractive retail business markets for twoconsecutive years in 2003 and 2004 and came second after India in 2005 and 2006. It isinteresting to note the developments in Ukraine (pop. 50 million) that have significantly

improved its ranking on the list (from 11th to 4th). The phenomenon of the CEE rise insignificance, which has already passed the first wave EU entrants (Poland, Hungary,Czech Republic), is facilitated by, for example, the potentially sustained EU expansion,global economic growth (which in the Russian case is partly due to the favourableworld prices of commodities, especially oil and ferrous metals) and the consequentlyemerging middle class.

Empirical part: case studiesThe empirical part of this research presents two case studies from different consumergoods industries and geographical markets in the CEE (holistic multiple-case study).The first company is the subsidiary of an international confectionary manufacturer,

with typical functional products that require a physically efficient supply chain, whilethe second is also an international manufacturer, but operating in the toy business,reflecting the characteristics of somewhat innovative products with new designsintroduced frequently, thus requiring more of a market-responsive supply chain(Fisher, 1997). The first case study is based in Russia, where distribution development

GRDI 1995 GRDI 2006Rank Country Region Rank Country Region

1 South Korea Asia 1 India Asia2 Poland Eastern Europe 2 Russia Eastern Europe3 Brazil Americas 3 Vietnam Asia

4 Chile Americas 4 Ukraine Eastern Europe5 Taiwan Asia 5 China Asia6 Indonesia Asia 6 Chile Americas7 Malaysia Asia 7 Latvia Eastern Europe8 Argentina Americas 8 Slovenia Eastern Europe9 Thailand Asia 9 Croatia Eastern Europe

10 Czech Republic Eastern Europe 10 Turkey Mediterranean

Source: A.T. Kearney (2006)

Table I.Global retail developmentindex 1995 vs 2006

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is still lagging behind some other CEE countries, such as the Czech Republic andPoland. The company in the second case study operates on a broader basis in the CEE,with a new distribution centre in the Czech Republic and customers additionally inPoland, Slovakia, Hungary, and Slovenia. The different nature of the case studies

allows interesting cross-case analysis and broader views on the topic.In terms of data collection methods, the cases are based on a number of on-site and

in-depth interviews with both case companies representatives (four in theconfectionary manufacturers case, five in the toy manufacturers case) as well aswith two Russian consumer good distribution experts in the first case, enabling us toanswer the how-and-why-oriented research questions that require the use of case studyresearch (Yin, 2003), and allowing the formation of an intimate linkage to empiricalevidence (Eisenhardt, 1989). The interviewed experts per case study are presented inTable II.

Data collection took place during December 2005-March 2006 for case study I, whiledata for the case study II was collected during January 2005-May 2005. To ensure thatthe data and information reported in the cases are accurate (containing also

distribution structures); the case report drafts were reviewed by the key informants. Inaddition to interviews, actual case company sales data were analysed, in order tocompare the utilised distribution channels (modern/direct vs traditional/indirect) andto explore the benefits to the companies from the view point of SCM.

Case study I: foreign FMCG manufacturer in RussiaGeneral distribution system in RussiaThe wholesale and distribution tier is probably the most complicated part of theRussian distribution system to comprehend. A simple classification of distributionactors is proposed:

. producers exclusive distributors, who have gained exclusive distribution deals

from manufacturers and can achieve wide coverage in their geographic area ofexclusivity (e.g. a suburb, a regional capital);. product segment distributors, who concentrate on particular product groups,

such as tobacco and beer;

Case study I Case study II

Topic: general distribution system in Russia Topic: toy distribution systems inWestern Europe and the CEE

Director, compass management partners Russia European logistics director,case study II company

Senior consultant, Economic Consulting Ltd,MoscowDistribution manager, case study I companyTopic: case study I companys operations Topic: case study II companys operationsCEO European logistics directorDistribution manager European distribution managerProduction and demand planning manager Eastern Europe key account managerLogistics manager Western Europe key account manager

Western and Eastern Europe forecast manager

Table II.The interviewed experts

per case study


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. general house suppliers, who extended their business to a number of productgroups and segments; and

. retailers distribution centres, which for the sake of emphasis have been includedin this tier as they will significantly change the Moscow and St Petersburgdistribution situation in the medium-term.

In terms of relationships with manufacturers, the most interesting ones are the cases of:. foreign manufacturer general house suppliers; and. the manufacturing tier retailers distribution centres.

The general house suppliers tend to be uncooperative, not customer oriented, andselective in their distribution strategies in spite of producer direction. On the otherhand, the distribution centres are the future of distribution in the major cities of Russia.They will simplify the distribution structure by reducing the echelons in thedistribution channel and may potentially allow the implementation of modern supply

chain practices in the medium-term.Pure wholesale intermediaries are: the wholesale markets, which have dominatedthe wholesale business for over a decade; and the recent arrival of cash and carryoperations of some foreign (e.g. Metro) and domestic companies (e.g. Lenta).

Wholesale markets are mainly outdoor complexes with entrepreneurial sellingactivity from containers both to consumers and independent store entrepreneurs alike.The cash and carry operations should, by definition, act as the suppliers oforganisations but in reality fail to adhere to this regulation. The current, unclear roleand involvement of the wholesale function in the retail business (b-to-c) negativelyinfluences the development of the modern retailing.

The retail tier consists of numerous entities from street vendors to multinationalretail chains. Unorganised retail includes kiosks, outdoor markets, Soviet-style general

stores (universam) and specialty stores. Organised and modern retail chainsincreasingly replenish numerous outlets from centralised distribution centres andstrive towards city-wide or even national coverage.

Case companys operationsThe case company is the subsidiary of an international confectionary manufacturerwith a factory located in St Petersburg and distribution operations in Moscow,St Petersburg and other major population centres all over Russia. In 2004, the Russiansubsidiary generated sales revenue of around US$ 20 million. The companysdistribution and sales operations are organised into ten business units, namelyNational key-accounts, Moscow, North-West, Central, Volga, South, Urals, Siberia andFar-East, Ukraine and other CIS Exports. In terms of distribution, the challenges and

problems are different in Moscow and St Petersburg in comparison to the other regionsand major cities. The companys simplified distribution scheme underlines the dualcharacteristic of the distribution set-up, and the previously-mentioned new emergingopportunity for more direct distribution (Figure 1).

Figure 1 shows the so-called traditional distribution channel structure with one ormore distributor/wholesalers between the manufacturer and the retailer, and theso-called key-account channel, where the manufacturer is able to deal with retailersdirectly, as they have invested to a centralised distribution centre (DC). While, the

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traditional channels are still important for the company, the most interesting channelin the future may be the retailer key-accounts with direct deliveries, which inSt Petersburg take up a 22 per cent share of sales, and in Moscow a major share of38 per cent. The key-accounts: offer an opportunity for direct cooperation with the

retail customers, and; allow improved business profitability.The type of demand data is of better quality and reflects to an improved degree the

actual demand for products as echelons (i.e. inventories) are eliminated from thedistribution channel.

Figure 2 shows the sales dynamics experienced by the case company per majorchannels (key-account, traditional) in Moscow. Figure 2 shows the noteworthydifference in the variances of sales in traditional channel vs the key-account channel.The coefficient of variation in the traditional channel is quite high (37.8 per cent),while it is much lower, although still quite significant, in the key-account channel(24.0 per cent). It seems that the key-accounts with a more direct distribution channeloffer less varying sales patterns, indicating an improved interface with theactual consumer demand. Traditional channels typically consist of 2-3distributor/subdistributor warehouses, while the key-account channels arepredominantly direct deliveries to the retailer DC. Additionally, key-accounts maytake daily deliveries of even as little as 20 boxes, while traditional channels usually

Figure 1.Case company distributionset-upOrganized retail

(key-accounts)Retail chains DCs

Case company:manufacturing

operations

Subdistributor

Wholesalemarkets

Unorganized /traditional retail

Distributor

Figure 2.Sales dynamics of a

12-month period(boxes/week)

10,000

20,000

30,000

40,000

50,000

Week2

Week4

Week6

Week8

Week10

Week12

Week14

Week16

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Week20

Week22

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Week28

Week30

Week32

Week34

Week36

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Week40

Week42

Week44

Week46

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Week52

Moscow Key-Account Moscow Traditional

Traditional 3 month moving average Linear (Moscow Key-Account)


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take a minimum of half a truck load (1,000 boxes) at a time. Special discount schemesare widely utilised in both channels, which partially explain the variation in sales.

In this difficult operating environment, the case company achieves low forecastaccuracy: share of cases, when weekly sales forecast stays inside the company policy

goal of^20 per cent deviation from point-blank, is 51 per cent for key-accounts ingeneral and 11 per cent for traditional in Moscow and 13 per cent for traditional in theNorth-West district (during weeks 32-49). These figures imply further problems tothe determination of stock levels. In Figure 2, we may also note the declining share ofthe traditional channel (three-month moving average) during the sample period and therising trend in the key-account channel (linear trend). The company has put anemphasis on marketing efforts towards the key-accounts, and they seem to enjoy apriority position in operations planning.

Case study II: Western European toy manufacturers distributionoperations in CEEToy distribution systems in USA, Western Europe and CEEDuring the time of research, the toy manufacturer had most of its manufacturingplants in Europe and had outsourced some components to thefar East. Several experts inthe company revealed that the most critical issue related to distribution structure wasthe great differences between North American, Asian, Western European (WE), andCEE countries. In the following, we review the key differences in a nutshell.

North American retailers have adopted the most modern channel formats, such ashypermarkets, discounters and specialists. In 2004, hypermarkets/discounters and toyspecialists have, respectively, accounted, for 50 and 40 per cent of the toys sold inNorth America. The top five US retailers sold more than 90 per cent of the toys. As allthese large retailers have their own regional distribution centres, toy suppliers areusually asked to deliver pallet/container quantity to these distribution centres.

The Western European retailers have adopted the modern channel formats to someextent (such as hypermarkets, discounters and specialists), while still employingthe relatively traditional channel formats such as department stores and wholesalers.The shares of hypermarkets/discounters, toy specialists, department stores andwholesalers were quite the same, ranging from 16 to 28 per cent in 2004. There werealso 1,000s of mom-and-pop stores situated in large and small cities throughoutthe Western European countries. This situation made the distribution structurecomplicated for toy suppliers. There could be deliveries to hundreds of regionaldistribution centres, and 1,000s of small retailers.

The CEE market was relatively less accessible for the toy manufacturer, as wellas international retail chains. Thus, the main channel for market access was still viathe wholesalers. During 2004, German wholesalers were controlling the toydistribution to the CEE countries. However, during the last few years, many largeinternational retail chains have established outlets in the CEE countries, especially inthe hypermarkets/discounter segment, e.g. Carrefour, Metro, Makro, Spar, Tesco,Alhold, and Real. This new development opened up the opportunity for directdistribution to the retailers in CEE.

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Toy distribution structures for CEEFigure 3 shows the European distribution and retail structures for the toy companyduring the period of 2002-2004. Since, the toy company had several manufacturing sitesin the European countries, it has located a central distribution centre in Germany. The

toy company combined the CEE markets (including Poland, Czech Republic, Slovakia,Hungary, and Slovenia) with part of the Western Europe markets (including Germany,Austria and Switzerland). During the first years of the new millennium, the toy sales toCEE were still relatively low, and additionally, the toy retailers in CEE were stillrelatively immature. The distribution centre in Germany served customers from bothWE and CEE countries and the German wholesalers contributed most of its sales to theCEE. The toy company did not attempt to directly deliver to the retailers in CEE, due toits inadequate knowledge of the local retail business practices. Additionally distributioncosts would be too high to justify the small sales volume. The German wholesalers,being neighbours and relatively more familiar with the CEE countries, seemed to havetheir own distribution channels established in CEE (they used the distribution channelsestablished by the German retailers such as Metro and Spar in Eastern Europe). With

such a distribution structure, the toy company faced high distribution costs due to theunorganised small outlets in WE (WE traditional), the lengthy wholesale distributionchannels in the CEE countries, and the seriously low demand and profit visibility fromthe unorganised small outlets in the CEE (CEE traditional).

The toy distribution structure, shown in Figure 3, is now experiencing a drasticrevolution, especially due to the realisation of the market economy policies and thedevelopment of logistics infrastructures in some CEE countries. The toy company hasmoved most of its manufacturing volumes and its central distribution centre to theCzech Republic, due to four main reasons:

(1) During the last decades, the number of international retailers in CEEhas increased drastically. The toy company realised that sales to the CEE key

accounts has overtaken the sales to the wholesalers. The toy company has

Figure 3.Toy distribution channel

structures for WE andCEE (2002/2004)

Distributioncentres (DCs)in Germany

Unorganized smalloutlets (WEtraditional)

CentralDistributioncentre (CDC)*

Toy companysmanufacturingoperations

Warehouses ofkey accounts(WE & CEE)

Organized key -account retail outlets(WE key-account)

WarehousesWholesale (forCEE)

Organized key-account retail outlets(CEE key-account)

Unorganized smalloutlets (CEEtraditional)

To US, OtherDC in Europeand Asia

Note: *The central distribution centre is moved to Czech Republic in 2006


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carried a mapping of its European sales and found that the central point hasshifted from Germany to Czech Republic.

(2) Amongst other CEE countries, the Czech Republic saw high growth of foreignretail chains, including Billa, Penny Market, Schwarz, Kaufland, Globus, Metro,Spar and Tesco. Hypermarkets and discounters are expanding exponentially inthe Czech Republic.

(3) The Czech Republic has more than 55,500 kilometres of roads, according to thecountrys Road and Motorway Directorate. Poland, which is four times the size ofthe Czech Republic, has just over 18,000 kilometres of national roads, expresswaysand motorways (further examination on Polish problems, please see Waters,1999a, b), while Hungary, around one-fifth larger than the Czech Republic, has halfas many roads. Furthermore, distribution of goods in Slovakia was problematicbecause mountains run from east to west and valleys from north to south. InSlovakia, east-west transport is slow and cross-border linkages to Poland areparticularly limited.

(4) The Czech Republic has become the logistic centre for many internationalcompanies, such as DHL, Parkridge, Skanska AB, Panalpina Welttransport AG,Tech Data Corp., and Deutsche Post AG.

The revolution of the toy distribution systems in the CEE would not be realisedwithout the partnership between the large international retailers and the toymanufacturer. The plans for mass retailing strategy were mostly initiated by the largeinternational retailers and mainly supported by investments from the manufacturers.

Demand development in the distribution operationsFigure 4 shows the demand patterns of a toy product between key-accounts (CEE) andtraditional channels (CEE) during 2003. Interestingly, both key-accounts and traditional

Figure 4.Weekly demanddevelopment in CEE toydistribution operationsduring 2003

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channels exhibited similar demand patterns, which were highly variable. The coefficientof variation in the traditional channel was very high (164 per cent), while it was equallyhigh (but slightly lower) in the key-account channel (150 per cent). The coefficient ofvariation is so high due to the order-behaviour and frequent promotion in the toy

industry (the key-account channels in Germany created even higher demand variability,order volume was ten times higher than the CEE retailers) and the nature of high forecasterror. Therefore, orders were mostly placed in large quantity and concentrated to the twoto three months before high selling seasons. This was still a common practice of theEuropean toy retailers (Wong et al., 2005). This explains why orders from the retailerdemands for both CEE key-account and CEE traditional channels were highly variable.

However, though creating high-demand variability, the key-accounts from CEE wererelatively accurate in their forecasts. It is quite general to accept 50 per cent averageforecast error in the toy industry. Forecast error from the CEE key-account channel wasabout 30-40 per cent, which was better than the forecast error in the CEE traditionalchannel, typically about 50-60 per cent. As distribution to the key-account channelinvolved 100s of delivery points with large quantities (usually pallet size delivery), anddistribution to the traditional channel involved 1,000s of delivery points with smallquantities (usually just a few units of an SKU), the distribution operations in CEE(especially for traditional channel) are still relatively costly. For additional information onthe toy manufacturers operations, see Wong and Johansen (2006) and Wong et al. (2006).

Discussion and conclusionsOn the basis of the literature review, we conclude that general economic development,diverse environmental variables, relative bargaining power of sectors in the consumergoods value chain, and internationalising firms as system catalysts, have importantimplications to the evolution and consequent structure of the distribution systems inspecific national markets. As a consequence: more direct distribution channels (echelon

elimination); and the formation of partnerships (Lambert et al., 1996) may be possible,facilitating a broader-based start-up of SCM implementation projects in the emergingmarket industries. Literature analysis, therefore, supports the relevance of the currentand prominent SCM theories of the West in the evolving CEE context.

Further, this research made an effort towards the description of the evolution ofdistribution systems in selected CEE countries in the context of existing theory, inorder to determine the consequent implications to SCM. A literature review concerningdistribution, logistics and supply chain management in the CEE was presented, withthe following conclusions: The early post-transition has seen the breakdown ofstate-owned supply chains and has allowed for the emerging of many small, localmiddle-men (including distributor-intermediaries and logistics service providers),which cause the supply chains to be complicated and lengthy. The emerging markets

which open up their economies by deregulation, privatisation, FDI inducement and bybuilding up infrastructure quickly, are those seeing more entries by the internationalretail businesses (as has been the case in the Czech Republic and Poland), withfunctional implications on consumer goods supply chains in general (Coe and Hess,2005). The late post-transition has seen further deregulation (more open market policy),and therefore, the more advanced international retailers and manufacturers are nowbuilding up their respective supply chains, as evolutionary processes gradually allowfor implementation of the latest and best SCM practices.


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As the two empirical case studies demonstrated, distribution structures in CEE arecomplicated, and contain overlapping phases; this is caused by simultaneousexistence of traditional (indirect) and modern (direct) retail structures. In order toachieve large enough sales volumes, both channels must currently be utilised in a

carefully-balanced manner, while the modern key-accounts and supply chainpartnerships offer prospects for improved distribution operations, and consequently,have a preferred status in marketing and operations planning and resource allocationdecisions. In general, the development and evolution of the Russian consumer goodsdistribution system seem to take place in accordance with the theory that was aired byMallen (1975), i.e. from the involvement of specialised intermediaries to direct, e.g.manufacturer-retailer relationships. It is also interesting to note that as complexity anduncertainty is higher in emerging CEE markets, location of factories and warehouseshas become a significant issue affecting supply chain operations. The toy manufacturerestablished its base in the Czech Republic with clear logistical advantages formanufacturing and distribution, and the confectionary manufacturer correspondinglyestablished the operational base in St. Petersburg, with highly-developed, modern retailindustry and good logistics connections to Moscow and other CIS markets. Inconclusion, we argue that the distribution system evolution does reflect upon thecompany decision making in terms of supply chain management, as well as networkdesign related planning (RQ1).

Our research findings support the general theory of supply chain management aswell: in the confectionary manufacturers case, a simpler and shorter supply chainresulted in a lower amount of variation in demand with more easily manageabledemand and operations planning (Ackere et al., 1993; Lee et al., 1997). However, theextent of demand variation was less obvious in the toy manufacturers case; demandwas very spiky and seasonal. Still, the management argued that somewhat lowervariation in demand in the case of key-accounts facilitated better forecast accuracy,

and consequently, considerably improved the supply chain performance. Thus, wecould rightly argue that delivery lot sizing and shortage gaming (Lee et al., 1997;Hejazi and Hilmola, 2006) are the primary causes of spiky demand development andgreater uncertainty in the toy manufacturers case. In conclusion, the modern and moredirect channels of distribution seem to offer operational benefits to manufacturingcompanies (and therefore, ultimately the efficiency of the retail chains), such as lowerdemand variation, better forecasts and general financial performance (RQ2), especiallyin the case of functional products where actual demand patterns can be made morevisible through collaboration in the sphere of information sharing.

It is, therefore, proposed that the opportunities for supply chain partnershipdevelopment should be reviewed and potentially developed with the appropriatesupport measures and investments. Cost-benefit analysis would lay the foundation for

correct levels and components in partnership development. However, we would like toemphasise that this research work is too limited to make strong generalisations.Therefore, more research, for example, in the form of case studies, is needed in order toverify our argumentation. The presented two case studies are essentially illustrativeexamples that suggest towards the above discussed conclusions.

As further research on this subject,we would like to propose thecontinuation of supplychain theory development through case studies from companies operating in the CEE. Wewould be interested in gaining answers, for example, to the following research questions:

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RQ1. Do any general trends exist in the SCM strategies applied in this region, or arethe more advanced approaches only implemented by leading internationalsupply chains?

RQ2. How manufacturing networks are planned to be enlarged to serve this region,and what is their role in SCM strategies? Hyderand Abraha (2003) have providedsome earlier case research with this regard (especially the latter item), and haveconcluded that factory establishment in Russia has been problematic, resultingin low efficiency and profitability, while manufacturingestablishment has beenapopular alternative in the new EU member states of the CEE.

Additionally, based on the above discussion, we present some propositions that couldbe tested in future research work:

P1. Economic development, environmental variables, changes in the relativebargaining power of sectors in the value chains and foreign firms cause theemerging market distribution systems to evolve, allowing for more direct

distribution structures.

P2. The distribution system evolution in emerging markets influences the supplychain decisions of the foreign companies, which include distribution channelselection and prioritisation, middle-man selection and role evaluation, as wellas network design issues.

P3. In comparison to the traditional distribution structures, the directkey-accounts and supply chain partnership oriented structures offerprospects for improved performance in the emerging market supply chains.

P4. In functional (vs innovative) product categories, demand amplification isrelatively higher in the emerging market traditional distribution structures in

comparison to the direct distribution structures withkey-account partnerships.

In general, we feel that there is a demand for research that would explore the successfulstrategies aimed at overcoming the high uncertainty originating constraints for supplychain management implementation in the emerging markets. Further, as waselaborated on in the literature review, the interaction of the environmental change withthe firms supply chain processes and the issue of adapting the firms SCM specificresources from mature markets to transitional emerging markets would be anotherbeneficial research approach.

Note

1. According to the UNCTAD definition, the CEE countries include: Albania, Belarus, Bosniaand Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania,Moldova, Poland, Romania, Russian Federation, Serbia and Montenegro, Slovakia, Slovenia,TFYR Macedonia, Ukraine (www.unctad.org).

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Appendix. The reviewed research distribution, supply chain management, andlogistics research on the CEESee Table AI on following pages.

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Reference/journal

Targeteraa

Industry

Purposeandfindings

CzechRepublic

Krasny(1992)/IJRDM

1and2

Retailtrade

Exploresthetransformationofretailin

gfromcommandsystemtofreemarket

environment;

thelegacyofcommunismisreflectedinpost-transitionretailinginnumberof

ways:

low-densityofretailprovision,lowretailcapacity,limitedpresenceofshopsw

ithnon-food

assortmentandmodernurge-scaleoutlets,widelocalandregionaldifferencesincapacityto

meettheconsumerdemand;obstaclesformodernisation:uncertaintyoverownershipsrights

andprivatisationprocess

Simovaetal.(2003)/IJRDM

2

Clothingretail

trade

DescribesthroughalongitudinalstudythestructuralchangesinCzechurban

clothing

retailing;concludesthat(1)smallertownsappeartobemoreconservativeintermsof

structuralchange,and(2)largertowns

demonstratemoreextensivechangesin

retailformat

patterns

Hungary

James(1992)/IJRDM

1and2

Retailtrade

Elaboratesonthedevelopingretaillan

dscapeofHungarywithacasestudyonadomestic

departmentstore;conclusion:operating

practicesdeviatedfrombestpracticein

theWestand

yetthebusinesssucceedsaspractices

areappropriatetotheretailenvironmen

tinHungary

HandfieldandWithers

(1993)/JBL

2

General

Compareslogisticsmanagementinsev

eralcountriesincludingHungary;arguesthat

companysizesincentrally-plannedeconomiespluslackoftechnicalknow-how

and

managerialskillsinHungaryaffectslogisticsoperations

Muelleretal.(1993)/IMR

2

Food

Considerstheevolutionofdistribution

systemsandpresentsaframeworkfortheanalysisof

marketchange;empiricalcasefromHungary,wherethedistributionsystemisarguedto

developalongthelinesexperiencedin

EuropeandNorthAmerica25yearsag

o

Chikan(1996)/IJPDLM

2

General

Elaboratesontheconsequencesofeconomictransitiontologistics,sofarthed

evelopment

haveaffectedlogisticsoperationfavou

rably

Lithuania

JauernigandRoe(2001)/TR

2

Generaland

transport

AnalysesthecurrentsituationinLithuanianlogistics;elaboratesonthetrendsand

developmentsininternationallogistics

,aswellasLithuaniasgatewaypotential

Poland

DaviesandSchmidt

(1991)/IJRDM

1and2

Retailtrade

ExploresthechangestakingplaceinPolishretailing,bothintermsofsectora

ndthe

marketingmix;majorissuesoriginatingfromthehistoricalandcurrentcontextareelaborated

onintermsimplicationstomarketentrants

Werwicki(1992)/IJRDM

1and2

Retailtrade

Discussesthechangesinthestructure

ofPolishretailingsince1982;elaboratesonthe

significanceofthedemonopolisationandremovalofstatecontroltotherestru

cturingand

privatisationofretailing

(continued)

Table AI.

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Reference/journal

Targeteraa

Industry

Purposeandfindings

Morton(1993b)/BFJ

2

Food

Reviewsthestateoffooddistribution

intheearlyposttransitionera;thesystemwasnot

responsivetofeedbackfromconsumers;factorssuchaspooraccesstofinance,employee

resistancetochange,highinterestratesandpoorconsumerspendingpowerhinderedpositive

developmentofthewholesalesector;cr

iticalfactorsaffectingsupplychaindevelopmentinthe

future:lackofmarketingunderstanding,uncompetitivenessagainstimportsandahighly

fragmentedretailsector

Rydzkowski(1993)/LTR

1and2

Transport

Describestheprivatisationandderegu

lationofthePolishtransportindustry;historical

burdenofthecommandeconomyand

thecurrentlogisticspracticesareelaboratedon;the

needfortrainedlogisticsstaffisstated

RydzkowskiandSpraggin

s

(1994)/IJPDLM

2

Transport

Elaboratesontherestructuring,privatisationandderegulationoftransportin

Poland;a

comprehensivetransportpolicyforan

yEasternbloccountries,willrequireamassiveeffort

involvingresearchandeducation

DawsonandHenley

(1999)/JEWB

1and2

Retailsupply

chain

Describeshypermarketretailingintern

ationalisationinPoland,withconsidera

tionsof

westernFDIsimplications:e.g.transfe

rofmanagerialknow-how,catalystform

odernisation;

supplychainsgreatlyaffected,withw

esternretailerscompetingforcontractswiththemore

advancedsuppliers,supplychainconstraints(e.g.inwarehousing)implystorespaceusedfor

stocks;operationaluncertaintiesandin

experiencedmanagerscontributetotheinapplicability

ofimportedprofitformulas;logisticssy

stemsaregraduallyemerging,howeverexpensiveand

foreign-operated

Waters(1999a)/IJRDM

1and2

Retailtrade

DescribesthechangesinPolishretail

sectorduringaperiodofradicalchange

;after

governmentinducedprivatisation,the

economicpower,whichhadpreviously

been

concentratedinthemanufacturingsec

tor,clearlymovedtotheretailers,follow

ingfamiliar

evolutionarylinesfromdevelopedcountries;largerstoresandmultiplestructu

reshavebeen

sinceevolvingwithinternationalcompaniesplayingasignificantrole

Waters(1999b)/IJPDLM

1and2

Transport

Elaboratesonthechangesinroadtransportduringtheeraoftransition;histo

rical

backgroundisprovidedwithemphasisontheheritageofinadequateroadnetwork;ifthe

developmentprocessdoesnotcontinue,thesupplychainoperationsmaysufferduetohigh

costsoftransportation

Abt(2001)/IJTM

2

Manufacturing

Elaboratesonthenecessityoflogistics

computerapplicationsintheeconomicdevelopmentof

PolandandtheneedforanationwideL

ogisticsPlatforminordertobenefitfrom

theincreased

internationaltradingopportunities

(continued)

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Reference/journal

Targeteraa

Industry

Purposeandfindings

Mehtaetal.(2001)/IMR

2

Automobile

dealership

Examineschannelleadershipstyles,cooperationandchannelmemberperform

anceacross

nationalsettingsinUSA,Finland,and

Poland;conclusion:standardisedleadershipstylesare

notappropriateforthefosteringofsuc

cessfulchannelstrategy;adaptationtocultureandthe

considerationofhistoricalbackground

isimportant,asforexamplethecommandeconomy

burdenmayhindercooperativeinitiatives

Spillanetal.(2003)/JEWB

2and3

General

Discussesthetransformationwithinthedistributionandlogisticssectors,where

privatisation,businessgrowthandFD

Ihavecontributedtoahighlycompetitive

environment;problemsandopportunitiesarediscussed;EUmembershipwillfurtherexpand

markets,withmodernisationeffectsoninfrastructureandlogisticssystems

Kisperska-Moron(2005)/IJPE

2and3

General

Presentsresultsofasurveytargeting

Polishcompaniesduring1993-2001;resultsindicate

thatPolishmanufacturerschangedtheirattitudesfavourablytowardscustomerserviceand

itscompetitiveadvantageaspects

Russia/SovietUnion

Ware(1950a)/JM

1

General

Elaboratesonthecostsofdistribution

intheSovietdomestictrade;problems

arediscussed

withemphasisonthediscrepancyinth

eofficialclaimoflow-distributioncostsv

ersussomeof

theempiricalrealities

Ware(1950b)/JM

1

Retailtrade

Describestheprocurementproblemso

fSoviet-eraretailing,withacaseexamplebread

distribution;theSovietretailerisconcludedtofaceanumberofrestrictionsand

pressures,as

wellaschronicshortageofsupplies;th

ecommandeconomysystemimpliessup

pliersmarket

andneglectscustomerpreferencesfor

quality,varietyandservice

Gochberg(1988)/JBL

1

Food

PresentsareportontheUSfoodlogis

ticsdelegationstourintheSovietUnion;themajor

entitiesandtheplanningprocessaredescribed;conclusions:thesovietdistributionand

logisticssystemislackingintechnologyincomparisontotheUSsystem,muchofthe

productionsystemislocalisedorregionalised,long-haultransportationandfinished-good

warehousingisgenerallyavoided,pro

ductivityislowwithsignificantlevelso

flabour

intensity,thereexistslittlecomprehen

sionoftheintegratedlogisticsconcepts

Huddleston(1993)/IJRDM

2

Food

Presentsexploratorydataonorganisationalstructuresandproductprocuremen

tprocessesof

Russianretailstores;resultshighlightthesimilaritiestoproductprocurementp

rocessesused

bylargeretailersintheUSA;changese

xpectedintheproductprocurementproc

essasaresult

ofthedynamiceconomicenvironment

(continued)

Table AI.

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694


26/28

Reference/journal

Targeteraa

Industry

Purposeandfindings

Jones(1993)/BFJ

2

Food

Elaboratesonthefruitandvegetablesectorandtheneedforcompleteremode

llingofthe

distributionsystem;significantproblem

sexistinthestorage,processingandre

tailingstages

ofthechannels;newmiddlemenareneededinordertoorganisesomevitalmarketingand

distributionfunctions

Rodnikov(1994)/IJPDLM

1and2

General

EvolutionoftheSovietdistributionsy

stemispresented;centralisedcontrolov

ereconomic

decisionsledtomajordistortionsinth

eeconomy:hypertrophyoftheproducergoodsand

armamentindustries,excessrawmater

ialandwork-in-processinventories,andthepreference

ofpolicygoalsoveraccountingprofits

andefficiency;theproblemsofunder-d

eliveriesand

stock-outswerecommonintheSoviet

industry,andthephenomenaarecharac

teristicofthe

post-Sovietindustryaswell

Taylor(1994)/IJPDLM

1and2

Food

AnalysesthestructureofRussianfoodsupplysystemsandidentifiesmajorin

herited

problems;thespecialisationofSovietstatesintheproductionofvariousagriculturalproducts

causeddisruptioninthesupplychainsastheSovietUniondisintegratedintoindependent

states;drasticpriceincreasesinsome

basicfoodproductscausedplummeting

demandand

consequentlydiscontinuedproduction;theSovietfoodsupplychainswerecha

racterisedby

majortraitsofmassivescale,centralis

edcontrol,andlackofcompetition

BeierandArdishvili

(1995)/IJLM

2

Consumer

durableretail

Describestheemergingsupplysystem

sforRussianconsumerdurableretailers

Hisrich(1996)/MRN

2

General

ProposesamodeloftheRussiandistributionsystemintransition;theco-existenceofmarket

economyandcentrally-plannedeconom

yprincipleshasthefollowingimplications:keyto

successisestablishinggoodrelationsh

ipsbothwithsuppliersandwithcustom

ers,lackof

availabilityofcapitalforcompanydev

elopment;inordertoovercomedistribu

tion

system-relatedproblems,entrepreneursneedtobeflexibleattheirperimeters

(continued)

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Reference/journal

Targeteraa

Industry

Purposeandfindings

Robinson(1997,1998)/IJRD

M,

EBR

2

Retailtrade

DescribesthestateofretaildistributionintheRussianFar-East,withelaborationonvarious

typesofentitiesandtheirownership,andfurthertheroleofretailinginRussianconsumer

society

Menkhausetal.(2004)/JEW

B

3

Food

DescribestheevolutionoftheRussian

foodretailingandsupplychains;theev

olutioninthe

retailsectorhasenabledthetransfero

fconsumerpreferencesinformationups

treaminthe

supplychain;intermediarieshavetakenanimportantroleinreducingtransactioncostsinthe

foodsupplysystemcharacterisedbyfragmentationandtheneedtoovercomev

astdistances;

individualhouseholdshavealargeshareasproductsuppliersinthetotalRus

sianlevel,

reflectingthelargeshareofindividualvendors,kiosks,andoutdoor-markets

Roberts(2005)/IJRDM

3

Foodretailing

Providesinsighttothecurrentphenom

enonofinternationalisationintheRussianretail

sector,byelaboratingonAuchansentrytotheRussianmarket;successwilldependonthe

abilitytoleveragecompetitiveadvantagesdevelopedinthehomemarket

Lorentzetal.(2006)/BJM

3

Retailtrade

Retailing;providesageneralreviewof

theRussianretailsectorwithcasestudie

sondomestic

retailers;describestheprospectsforcross-borderM&Aactivity

Notes:a1

pre-transition,2

earlypost-transition,3

latepost-transition(inRussia:post199

8-financialcrisis,inotherCEEC:2000-).Journal

abbreviations:Internatio

nalJournalofRetail&Distribution

Management(IJRDM),InternationalJournalofPhysicalDistributiona

ndLogistics

Management(IJPDLM),BritishFoodJournal(BFJ),JournalofBusinessLogistics(JBL),InternationalMarketingReview(IMR),TransportReview(TR),

LogisticsandTransporta

tionReview(LTR),InternationalJournalofTechnologyManagement(IJTM

),InternationalJournalofProductionEconomics

(IJPE),JournalofMarketing(JM),InternationalJournalofLogisticsManagement(IJLM),ManagementResearchNews(MRN),EuropeanBusinessReview

(EBR),JournalofEast-W

estBusiness(JEWB),BalticJournalofManagement(BJM)

Table AI.

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About the authorsHarri Lorentz is completing his PhD at the Turku School of Economics (Finland). His researchinterests are concentrated on the supply chain management issues in the consumer goods sector,especially in emerging markets, such as Central and Eastern European (CEE) countries. In

addition to research work, he has experience from FMCG export operations to Russia. He haspublished a number of international journal articles, conference papers and research reports.E-mail: [email protected]

Chee Yew Wong is a research fellow at the School of Management in Cranfield University inthe UK. His research interests include supply chain integration and coordination strategies,especially for automotive and retail supply chains. His PhD work on coordinated marketresponsive supply chain is published in a number of international journals on logistics anddistribution management. He also has experience in teaching supply chain management,simulation and modelling, and managing a supply management department in a multinationalpower transmission company. E-mail: [email protected]

Olli-Pekka Hilmola is an Acting Professor of Logistics at Lappeenranta University ofTechnology (LUT), in Kouvola, Finland. Concurrently he serves as a Visiting Professor ofLogistics at the University of Skovde, Sweden, and as a Docent of Supply Chain Management at

the Turku School of Economics (Turku, Finland). His research interests include supply chainmanagement, theory of constraints, system dynamics and total productivity management.Olli-Pekka Hilmola is the corresponding author and can be contacted at: [email protected]

To purchase reprints of this article please e-mail: [email protected] visit our web site for further details: www.emeraldinsight.com/reprints


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