The influence of logistics clustering on distribution capabilities: a qualitative study

Abstract

Purpose The purpose of this paper is to explore why and how firms with logistics-intensive operations such as fast-moving consumer good (FMCG) distributors benefit from residing in logistics clusters. In particular, this study seeks to fill a gap in the understanding of how logistics clustering may influence FMCG firms’ distribution capabilities. Design/methodology/approach Three case studies of FMCG distributors geographically agglomerated within Q Logistics Cluster in Jordan serve to elaborate the existing theory of clustering. Data were collected from 24 interviews as well as observational evidence of the FMCG distributors’ outbound logistics operations. The unit of analysis was the interaction between FMCG distributors and other agents in the logistics cluster. Findings FMCG distributors tend to gravitate to clusters where logistics service providers and other FMCG firms co-locate. FMCG distributors interact intensively and benefit greatly from building ties with non-competitor distributors in a cluster. Informal personal relations, collaborative activities and knowledge sharing, learning opportunities and resource availability were found to act as mechanisms for generating distribution capabilities within a logistics cluster. Practical implications This study provides practical implications for FMCG logistics and distribution managers who make distribution centre (DC) location decisions. The study provides such managers and their firms with a deeper understanding of the importance of co-locating DCs in logistics clusters, and may help them in designing their supply networks. Originality/value This is the first scholarly work to uncover the various ways in which FMCG distributors benefit from logistics clustering and explain why they may differ in performance, building on observations of their capabilities. The study provides insight from an emerging market and encourages future researchers to conduct further studies on logistics clustering in order to bring relevant theory forward.