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Outline
The Role of Distribution in the Supply Chain Factors Influencing Distribution Network Design Design Options for a Distribution Network E-Business and the Distribution Network Distribution Networks in Practice Summary of Learning Objectives
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Distribution network design options must therefore be compared according to their impact on customer service and the cost to provide this level of service
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Response Time
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Cost
Local WIP Central FG Central WIP Central Raw Material and Custom production Custom production with raw material at suppliers
Low Low
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Response Time
Hi
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Number of facilities
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Number of facilities
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Number of facilities
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Total Costs
Number of Facilities
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Variation in Logistics Costs and Response Time with Number of Facilities (Fig. 4.5)
Response Time
Number of Facilities
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Distribution network---- 1- Will the goods be delivered to the customers location or goods to be picked up from predetermined place ? 2- Will the goods flow through an intermediary?
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Retailer
advantage is to aggregate the demand at manufactures place. Centralize the inventories. Information investment needs to be strong. Little postponement possible.
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Factors to discuss
Elements of customer service influenced by network structure:
Response time Product variety Product availability Customer experience Order visibility Returnability Inventories Transportation Facilities and handling Information
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Retailer
Customers
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Distributor/Retailer Warehouse
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Retailer
Cross Dock DC
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Inventory stored at manufacturer or distributor place but customers place orders online or by phone and then travel to designated pick-up points to collect their merchandise. Orders are shipped from storage site to pick-up points as needed.
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Comparative Performance of Delivery Network Designs (Table 4.7) 1= strongest performance, 6= weakest performance
Retail Storage with Customer Pickup Manufacturer Storage with Direct Shipping Manufacturer Storage with InTransit Merge Distributor Storage with Package Carrier Delivery Distributor storage with last mile delivery Manufacturer storage with pickup
Response Time Product Variety Product Availability Customer Experience Order Visibility Returnability Inventory Transportation Facility & Handling Information 2007 Pearson Education
1 4 4 5 1 1 4 1 6 1
4 1 1 4 5 5 1 4 1 4
4 1 1 3 4 5 1 3 2 4
3 2 2 2 3 4 2 2 3 3
2 3 3 1 2 3 3 5 4 2
4 1 1 5 6 2 1 1 5 5
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High demand product Medium demand product Low demand product Very low demand product Many product sources High product value Quick desired response High product variety Low customer effort
+2 +1 -1 -2 +1 -1 +2 -1 -2
-2 -1 +1 +2 -1 +2 -2 +2 +1
-1 0 0 +1 -1 +1 -2 0 +2
0 +1 +1 0 +2 +1 -1 +1 +2
+1 0 -1 -2 +1 0 +1 0 +2
-1 0 +1 +1 0 +2 -2 +2 -1
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