DISTRIBUTION NETWORKS- LAST MILE DELIVERY

WITH CUSTOMER PICKUP AND JUST IN TIME

Presented by:
Gayathri M. [14020241076]
Pavithra Narasimhan[14020241077]
Satyabrata Mishra [14020241079]
Tirtha Prasad Pokhrel [14020241128]
Trisha Niyogi [14020241080]
Zubin Deepak [14020241081]

Role of Distribution Networks in Supply Chain

Distribution the steps taken to move and store a product from
the supplier stage to the customer stage in a supply chain
Drives profitability by directly affecting supply chain cost and the
customer experience
Choice of distribution network can achieve supply chain objectives
from low cost to high responsiveness

Factors influencing Distribution Network

design
Performance of a distribution network must be evaluated along
two dimensions:
Customer needs that are met
Cost of meeting customer needs
The customer needs that are met influence the companys
revenues, which along with the cost decide the profitability of the
distribution network.

Last Mile Delivery

Last mile delivery refers to the distributor/retailer delivering the
product to the customers home instead of using a package carrier.
In areas with high labor costs, it is very hard to justify distributor
storage with last mile delivery on the basis of efficiency or
improved margin. It can only be justified when there is a large
enough consumer segment willing to pay for this convenience.
An effort should be made to combine last mile delivery with
existing distribution network to exploit economies of scale and
improve utilization.

Illustration of Last Mile Delivery

Automotive spare parts delivery is an example of lastmile delivery

Manufacturer or Distributor storage with Customer

pickup
Inventory is stored at the manufacturer or distributor warehouse
but customers place their orders online or on the phone and then
travel to designated pickup points to collect their merchandise.
Orders are shipped from the storage site to the pickup points as
needed. Such a network is likely to be most effective if existing
locations such as coffee shops, convenience stores, or grocery
stores are used as pickup sites, because this type of network
improves the economies from existing infrastructure.

Illustration of Manufacturer or Distributor storage

with Customer pickup

Retailer Storage with Customer pickup

Inventory is stored locally at retail stores. Customers walk into the
retail store or place an order online or by phone and pick it up at the
retail store. It is best suited for fast moving items or items for which
consumers value rapid response.

Comparitive performance of Distribution Network

Designs

What is Just-In-Time?
Just in Time (JIT) production is a manufacturing philosophy
which eliminates waste associated with time, labour, and
storage space.
JIT was very much a mindset/way of looking at a production
system that is distinctly different from what (traditionally) had
been done previous to its conception. (Just in Case)

History of JIT
"Catch up with America in three years, otherwise the

automobile industry of Japan will not survive

JIT principles was first used by the Ford Motor Company in the
1920s.
JIT was adopted and publicized by Toyota Motor Corporation of
Japan as part of its Toyota production System (TPS) in 1954 to
reduce wasteful overstocking in car production.
Taiichi Ohno, the father of Just-in-time management
strategy.
Spread to the United States in the 1980s.

Advantages of JIT

Minimal amount of inventory obsolescence

Easy to halt production of a product and switch to another
Lesser investment in inventory
Production mistakes can be spotted quickly
Inventory holding costs (like warehouse spaces ) can be
minimized

Disadvantages of JIT
Correct and accurate delivery, if not done, may affect the
production process
Natural disasters can halt the production process almost at once
Coordination between the delivery of parts and materials is a must

Real life examples of successful JIT SystemsTOYOTA and DELL

Important factors to TOYOTAs success:
Small amounts of raw material inventory must be kept at each node in production, so that
production can take place for any product. These parts are then replenished when they are
used.
Accuracy of forecasting is important so the correct amount of raw materials can be stocked.
Important factors to DELLs success:
Dependable suppliers with the ability to meet Dells demanding lead time requirements.
A seamless system that allows Dell to transmit its component requirements so that they will
arrive at Dell in time to fulfill its lead times.
A willingness of suppliers to keep inventory on hand allowing Dell to be free of this
responsibility.

JIT failure at Sony Ericsson

In March 2000, a lightning bolt struck a Philips Electronics semiconductor plant in
Albuquerque, N.M., triggering a small fire in a chip-processing machine that took the plant
offline for months.
The plant was Ericsson's sole supplier of chips for use in its cell phones.
Without the chips, the Swedish company was unable to keep up with the demand for its
products, and ended up losing more than $2 billion in connection with the incident. In
October 2001, less than two years after the fire, Ericsson cut its cellphone business exposure
by entering into a joint venture with Sony.

Considering Ericsson's tale of woe, it hardly comes as a surprise

that supply-chain risks rank high on the list of corporate concerns
in today's global marketplace.