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RIRL 2010 - key trends in supply chain management research
Edited by Jacques Colin and Dominique Estampe
Introduction
Direct distribution, such as drop shipment and merge-in-transit, is an example of how logisticians try to simplify the logistics systems and reduce transportation work by changing the network structure and the business processes. Drop shipment is, e.g. when the seller of a good does not touch it, but ships directly from a subcontracted manufacturer to the final customer. This creates shortcuts in the goods flow, which reduces lead-time, tied up capital, logistics costs - but also environmental impact such as CO2 emissions due to reduced transport. Hence it makes perfect sense from a logistics and environmental perspective. But a dark side of direct distribution has been observed: the "perfect" logistics solutions could be either very costly, or even impossible to implement, when meeting the legal and fiscal reality of the companies' legal structure and the specific countries involved. Our observation is hence that new logistics solutions have to be carefully evaluated also from a legal/fiscal perspective.
A literature review of leading logistics journals shows that the link between supply chain management (SCM) and the legal/fiscal domain has only rarely been a topic in the logistics domain. [25] Van Hoek et al. (2008) asks for more research regarding internal alignment between logistics and other peer functions, and points explicitly to the legal function as an important interface where they did not found any research performed. Also [24] Trent (2004) gives legal as an example of a function that is interacting with logistics.
From a legal/fiscal perspective, logistics and SCM have historically not been a topic of interest. Lawyers normally do not understand the logic and the principles logisticians base their decisions on, and, frankly, they do not care. But finance departments in multinational companies are starting to look at the link between global tax burden and effective SCM as a way to minimise their global tax charge. State and local governments are also competing to attract companies to locate in certain areas by offering different "packages" of tax incentives ([21] Sweeney, 1998; [10] Gooley, 1998). In recent years, major consultancy firms in law and accounting have launched ideas and "products" such as "tax aligned supply chain" (Deloitte),...