2.
Distribution Network
in a Supply Chain
Objectives
The Role of Distribution in the SC
Factors Influencing Distribution Network Design
Design Options for a Distribution Network
The Value of Distribution in the SC
Distribution Networks in Practice
Summary of Learning Objectives
3.
Distribution Network
in a Supply Chain
The Role of Distribution in the SC
Distribution – The steps taken to move and store a
product from the supplier stage to a customer stage
in the SC
Distribution directly affects cost and the customer
experience and therefore drives profitability
Low cost to high responsiveness
Example – Wal-Mart, Dell, P&G
4.
Distribution Network
in a Supply Chain
Factors Influencing Distribution Network Design
Two Dimensions –
Customer needs that are met
Cost of meeting customer needs
5.
Distribution Network
in a Supply Chain
Design Options for a Distribution Network
Mannufacturer storage with direct shipping
Manufacturer
Retailer
Customers
Product Flow
Information Flow
6.
Distribution Network
in a Supply Chain
Design Options for a Distribution Network
Mannufacturer storage with direct shipping (contd...)
Cast Factor Performance
Inventory Low Costs
Transportation Higher Transportation costs
Facilities and handing Lower facility costs
Service Factor Performance
Response time High response time
Product variety high level of variety
Product availability high level of product availability
7.
Distribution Network
in a Supply Chain
Design Options for a Distribution Network
Mannufacturer storage with direct shipping and In-
Transit Merge
Factories
Retailer
Product Flow
In-Transit Merge by
Carrier
Customers
8.
Distribution Network
in a Supply Chain
Design Options for a Distribution Network
Mannufacturer storage with direct shipping and In-Transit Merge
(contd...)
Cast Factor Performance
Inventory Drop-shipping
Transportation lower Transportation costs
Facilities and handing Higher facility costs
Service Factor Performance
Response time High response time
Product variety high level of variety
Product availability high level of product availability
9.
Distribution Network
in a Supply Chain
Design Options for a Distribution Network
Distributor Storage with Carrier Delivery
Factories
Customers
Product Flow
Information Flow
Warehouse Storage by
Distributor/Retailer
10.
Distribution Network
in a Supply Chain
Design Options for a Distribution Network
Distributor Storage with Carrier Delivery (contd...)
Cast Factor Performance
Inventory Higher than Manufacturere storage
Transportation Lower than Manufacturere storage
Facilities and handing Higher than Manufacturere storage
Service Factor Performance
Response time Faster than Manufacturere Storage
Product variety Lower than Manufacturere storage
Product availability high level of product availability
11.
Distribution Network
in a Supply Chain
Design Options for a Distribution Network
Distributor Storage with Last Mile Delivery
Factories
Customers
Product Flow
Information Flow
Warehouse Storage by
Distributor/Retailer
12.
Distribution Network
in a Supply Chain
Design Options for a Distribution Network
Distributor Storage with Carrier Delivery (contd...)
Cast Factor Performance
Inventory Higher than Distributor storage with package carrier delivery
Transportation very high cost
Facilities and handing Higher than Manufacturere storage
Service Factor Performance
Response time Very Quick
Product variety Lower than Manufacturere storage
Product availability More expensive to provide availability
13.
Distribution Network
in a Supply Chain
Design Options for a Distribution Network
Manufacturer or Distributor Storage with Consumer
Pickup
Factories
Retailer
Pickup Sites
Product Flow
Information Flow
Cross Dock DC
Customer Flow
Customers
14.
Distribution Network
in a Supply Chain
Design Options for a Distribution Network
Manufacturer or Distributor Storage with Consumer Pickup
(contd...)
Cast Factor Performance
Inventory Can match any other option depending on the location
Transportation Lower than the use of package carriers
Facilities and handing Very high if new facilities
Service Factor Performance
Response time Similar to carrier delivery
Product variety Similar to other manufacturer
Product availability Similar to other manufacturer
15.
Distribution Network
in a Supply Chain
Design Options for a Distribution Network
Retail Storage with Customer Pickup
Inventory is stored locally at retail stores
Cast Factor Performance
Inventory Higher than all other options
Transportation Lower than all other options
Facilities and handing Higher than all other options
Service Factor Performance
Response time Same day pickup possible for items stored locally at pick up site
Product variety Lower than all other options
Product availability More Expensive to provide than all other options
16.
Distribution Network
in a Supply Chain
The Value of Distributors in the SC
Distributing Consumer Goods in India
Small replenishment lot size
Lowering transportation cost
Improving replensihment response time
Distributing MRO Products
Emergency in small quantities
17.
Distribution Network
in a Supply Chain
The Value of Distributors in the SC
Distributing Electronic Components
Improvement in SC performance
Reduction in inbound transportation cost
Reduction in inventory costs
Lower cost by planning production more effectively
Inventory closer to the point of sale
One-stop shopping
ergency in small quantities
