Beruflich Dokumente
Kultur Dokumente
network
in a Supply Chain
1
Role of distribution
Distribution
2
Network choice
Achieve supply chain objective
Companies in same industry select different
networks
Using distributors
What determines design choice?
3
Basis for evaluating distribution
network performance
4
Elements of customer service
influenced by network structure
Response time
Product variety
Product availability
Customer experience
Time to market
Order visibility
Returnability
5
Supply chain costs affected by
network structure
Inventories
Transportation
6
Desired Response Time and
Number of Facilities
Number of
Facilities
Response Time
7
The Cost-Response Time Frontier
Hi Local FG
Mix
Regional FG
Local WIP
Cost Central FG
Central WIP
8
Inventory Costs and Number
of Facilities
Inventory
Costs
Number of facilities
9
Transportation Costs and
Number of Facilities
Transportation
Costs
Number of facilities
10
Facility Costs and Number
of Facilities
Facility
Costs
Number of facilities
11
Total Costs vs. Number of Facilities
Total Costs
Total Costs
Facilities
Inventory
Transportation
Number of Facilities
12
Logistics Costs & Response Time
vs. Number of Facilities
Response Time
Number of Facilities
13
Design Options for a Distribution
Network
Key decisions
Where to store?
14
Design Options for a Distribution
Network
Manufacturer Storage with Direct Shipping
Manufacturer Storage with Direct Shipping and
In-Transit Merge
Distributor Storage with package carrier Delivery
Distributor Storage with Last Mile Delivery
Manufacturer/ Distributor Storage with Consumer
Pickup
Retail Storage with Consumer Pickup
15
Manufacturer Storage with
Direct Shipping
Manufacturer
Retailer
Customers
Product Flow
Information Flow
16
Manufacturer Storage with
Direct Shipping
Centralize inventory at manufacturer
High availability with low inventory
Ownership structure of inventory
High value, low demand items with uncertain demand
Postponement
Lowers inventory
18
Manufacturer Storage with
Direct Shipping
Response time large
Good information infrastructure needed
Customer experience
Order visibility
Handling returns difficult
19
Manufacturer Storage with
Direct Shipping
Factories
Customers
Product Flow
Information Flow
21
In-Transit Merge Network
Combines pieces of order from different
locations
Single delivery to customer
Aggregation
Postponement
Lower transport costs
Facility & processing cost higher
Lower receiving cost
22
In-Transit Merge Network
Information infrastructure
Coordination may be more difficult
Disadvantage
Additional merge effort
Best for
Low to medium demand high value items
Obtained from few manufacturers
24
Distributor Storage with
Carrier Delivery
Factories
Warehouse Storage by
Distributor/Retailer
Customers
Product Flow
Information Flow
25
Distributor Storage with
Carrier Delivery
Inventory held by distributors/ retailers
Package carriers between intermediate
location to customers
Higher inventory than last options
Medium to fast moving items
Postponementif warehouse has
assembly capacity
26
Distributor Storage with
Carrier Delivery
Transport costs lower
Facility cost higher
Processing & handling costs comparable
Information infrastructure less complex
Better response time
Customer convenience, returnability better
Time to market higher
Order visibility easier
27
Distributor Storage with
Last Mile Delivery
Factories
Distributor/Retailer
Warehouse
Customers
Product Flow
Information Flow
28
Distributor Storage with
Last Mile Delivery
No package carrier used
Limited radius can be served
Warehouse closer to customer
More warehouses
Higher inventory
Fast moving items
30
Distributor Storage with
Last Mile Delivery
31
Distributor Storage with
Last Mile Delivery
Pickup Sites
Customers
Customer Flow
Product Flow
33
Information Flow
Manufacturer or Distributor Storage
with Customer Pickup
Orders shipped from storage to pickup points
Low inventory costs
Low transport costs
Facility costs high if new pickup points
Processing costs high
Comparable at manufacturer/ warehouse
High at pickup sites
Significant information infrastructure
34
Manufacturer or Distributor Storage
with Customer Pickup
Response time same as package carriers
Variety & availability comparable to distributor/
manufacturer storage
Some loss of customer experience
Order visibility important
Returns handled at pickup sites
35
Manufacturer or Distributor Storage
with Customer Pickup
Advantages
Lower delivery costs
Increased set of products sold
More customers served online
Disadvantages
Increased handling costs
Pickup sites
Build new
Develop capabilities in old
36
Retail Storage with Customer
Pickup
Most traditional
High inventory costs
Best for fast moving goods
Transport cost low
Facility cost high
Information infrastructure
Minimal if customers order at store
High for online orders
37
Retail Storage with Customer
Pickup
Good response time
Lower product variety
Expensive to provide high availability
Customer experience varies
Time to market highest
38
Retail Storage with Customer
Pickup
Order visibility important
Returnability fairly good
Best for
Fast moving items
39
Selecting a distribution
network design
40
Comparative Performance of
Delivery Network Designs
Retail Distributor Distributor
Storage with Manufacturer Manufacturer Storage with storage with Manufacturer
Customer Storage with Storage with In- Package Carrier last mile storage with
Pickup Direct Shipping Transit Merge Delivery delivery pickup
Response Time 1 4 4 3 2 4
Product Variety
4 1 1 2 3 1
Product Availability
4 1 1 2 3 1
Customer varies
4 3 2 1 5
Experience
Order Visibility 1 5 4 3 2 6
Returnability 1 5 5 4 3 2
Inventory 4 1 1 2 3 1
Transportation 1 4 3 2 5 1
Facility & Handling
6 1 2 3 4 5
Information 1 4 4 3 2 5
41
Product Characteristics & Customer
Preferences vs. Network Design
Retail Manufacturer Manufacturer Distributor Distributor Manufacturer
Stora Storage Storage Storage with storage storage
ge with with In- Package with last with
with Direct Transit Carrier mile pickup
Custo Shipping Merge Delivery delivery
High demand product mer
+2Picku -2 -1 0 +1 -1
p
Medium demand product
+1 -1 0 +1 0 0
Low demand product
-1 +1 0 +1 -1 +1
Very low demand
product -2 +2 +1 0 -2 +1
Many product sources
+1 -1 -1 +2 +1 0
High product value
-1 +2 +1 +1 0 -2
Quick desired response
+2 -2 -2 -1 +1 -2
High product variety
-1 +2 0 +1 0 +2
Low customer effort
-2 +1 +2 +2 +2 -1
42
E-business & Distribution Network
Impact on customer service
Response time to customers
Delay for physical products
No delay for downloadable products
Information
Share to improve visibility
Reduce overall cost by improving coordination
Cost of information infrastructure
46
Examples of E-business
PCs
Dell
Books
Amazon.com
Grocery
Peapod
MRO supplies
Grainger.com
47
Value of Distributors
in the Supply Chain
48
Distributing Consumer Goods in
India
Numerous small retail outlets
FMCGs of low value
Transport cost important
Retailers small size
Small replenishment lots
Store variety of products
Manufacturers need to
Bring FTLs close to market
Distribute locally using milk runs with smaller vehicles
49
Distributing Consumer Goods in
India
Intermediaries
Receive FTL
Store inventory
Break bulk
Give smaller deliveries to retailers
52
Value added by distributors
53
Value added by distributors
Stable
order stream from distributor to
manufacturer
Lowers cost by planning production better