A method of moving goods through the supply chain by fully utilising transport during its downtime. In its simplest form, it is the collection of goods from local suppliers using vehicles returning from store deliveries

Okay, so what is factory gate pricing?
Transportation costs have traditionally been included within the manufacturer's price. However, factory gate pricing aims to establish a price for completed goods that excludes any transportation costs. By establishing these charges, retailers can review transportation arrangements in the hope of maximising cost efficiencies and creating a "we collect" supply chain model

Sounds simple. Why is it so controvesial?
Suppliers remain suspicious of retailer motives ­ particularly as to how they will use the information on product costings. Another concern is that savings made in one area will inevitably add cost in another. And there are still fears that retailers are moving too quickly with factory gate pricing and will struggle to implement such a complex supply chain model

Still confused?
IGD will be running a conference next February when all the major players will examine the practices and progress of factory gate pricing. E-mail supplychain@igd.com for more information

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