The use of FGP on domestic flows has existed for some time, often being termed supplier collection or ex-works pricing. One of the earliest adopters has been the fashion industry, with Hawes describing the example of a major UK high street retailer. Store delivery vehicles were used to collect products from suppliers for delivery to a central warehouse. Another industry that has successfully deployed FGP is the automotive sector for the delivery of parts to manufacturers. In both cases, FGP has been introduced to reduce lead times
In the grocery sector in the UK, the first move towards FGP was announced by Tesco in 2001. Subsequently, their lead has been followed by some retailers, while others have looked to optimise their inbound logistics without moving to FGP, for example through the use of transport management systems. What distinguishes the application of FGP within the grocery sector from previous examples is the increased complexity of distribution. Table I compares two FGP application with similar annual volumes, the grocery example representing the case study company in this paper. For each attribute, the grocery sector is at least a factor of ten greater, increasing complexity and having implications for the efficient management of the inbound network.
The application of FGP has lead to broad debate as to its merits. In the context of transport, there are concerns that it could be used as a mechanism to reduce haulage rates and put pressure on profit margins. However, there is a more positive perception from the larger third party logistics providers, possibly as they may benefit more than smaller, independent hauliers. A survey of suppliers at the outset of FGP presented mixed opinions, with a perception that cost reduction was the main motive of the retailers. However, assuppliers become more familiar with the concept, there appears to be benefits emerging for them