ch04-Designing-the-Distribution-Network-in-a-Suppl

Chapter4DesigningtheDistributionNetworkinaSupplyChain4-2OutlineI.TheRoleofDistributionintheSupplyChainII.FactorsInfluencingDistributionNetworkDesignIII.DesignOptionsforaDistributionNetworkIV.E-BusinessandtheDistributionNetworkV.DistributionNetworksinPracticeVI.SummaryofLearningObjectives4-3I.TheRoleofDistributionintheSupplyChain1.Distribution:thestepstakentomoveandstoreaproductfromthesupplierstagetothecustomerstageinasupplychain2.Distributiondirectlyaffectscostandthecustomerexperienceandthereforedrivesprofitability3.Choiceofdistributionnetworkcanachievesupplychainobjectivesfromlowcosttohighresponsiveness4.Examples:Wal-Mart,Dell,Proctor&Gamble,Grainger4-4II.FactorsInfluencingDistributionNetworkDesignDistributionnetworkperformanceevaluatedalongtwodimensionsatthehighestlevel:–Customerneedsthataremet–CostofmeetingcustomerneedsDistributionnetworkdesignoptionsmustthereforebecomparedaccordingtotheirimpactoncustomerserviceandthecosttoprovidethislevelofservice4-5II.FactorsInfluencingDistributionNetworkDesignElementsofcustomerserviceinfluencedbynetworkstructure:①Responsetime②Productvariety③Productavailability④Customerexperience⑤Ordervisibility⑥ReturnabilitySupplychaincostsaffectedbynetworkstructure:①Inventories②Transportation③Facilitiesandhandling④Information4-6ServiceandNumberofFacilities(Fig.4.1)NumberofFacilitiesResponseTime4-7TheCost-ResponseTimeFrontierLocalFGMixRegionalFGLocalWIPCentralFGCentralWIPCentralRawMaterialandCustomproductionCustomproductionwithrawmaterialatsuppliersCostResponseTimeHiLowLowHi4-8InventoryCostsandNumberofFacilities(Fig.4.2)InventoryCostsNumberoffacilities4-9TransportationCostsandNumberofFacilities(Fig.4.3)TransportationCostsNumberoffacilities4-10FacilityCostsandNumberofFacilities(Fig.4.4)FacilityCostsNumberoffacilities4-11TransportationTotalCostsRelatedtoNumberofFacilitiesTotalCostsNumberofFacilitiesInventoryFacilitiesTotalCosts4-12ResponseTimeVariationinLogisticsCostsandResponseTimewithNumberofFacilities(Fig.4.5)NumberofFacilitiesTotalLogisticsCosts4-13III.DesignOptionsforaDistributionNetwork1.ManufacturerStoragewithDirectShipping2.ManufacturerStoragewithDirectShippingandIn-TransitMerge3.DistributorStoragewithCarrierDelivery4.DistributorStoragewithLastMileDelivery5.ManufacturerorDistributorStoragewithConsumerPickup6.RetailStoragewithConsumerPickup7.SelectingaDistributionNetworkDesign4-14ManufacturerStoragewithDirectShipping(Fig.4.6)ManufacturerRetailerCustomersProductFlowInformationFlow4-15In-TransitMergeNetwork(Fig.4.7)FactoriesRetailerProductFlowInformationFlowIn-TransitMergebyCarrierCustomers4-16DistributorStoragewithCarrierDelivery(Fig.4.8)FactoriesCustomersProductFlowInformationFlowWarehouseStoragebyDistributor/Retailer4-17DistributorStoragewithLastMileDelivery(Fig.4.9)FactoriesCustomersProductFlowInformationFlowDistributor/RetailerWarehouse4-18ManufacturerorDistributorStoragewithCustomerPickup(Fig.4.10)FactoriesRetailerPickupSitesProductFlowInformationFlowCrossDockDCCustomerFlowCustomers4-19ComparativePerformanceofDeliveryNetworkDesigns(Table4.7)InformationFacility&HandlingTransportationInventoryReturnabilityOrderVisibilityCustomerExperienceProductAvailabilityProductVarietyResponseTimeManufacturerstoragewithpickupDistributorstoragewithlastmiledeliveryDistributorStoragewithPackageCarrierDeliveryManufacturerStoragewithIn-TransitMergeManufacturerStoragewithDirectShippingRetailStoragewithCustomerPickup1111111111111111122222222223333333333444444444444455555556654-20LinkingProductCharacteristicsandCustomerPreferencestoNetworkDesign(Table4.8)LowcustomereffortHighproductvarietyQuickdesiredresponseHighproductvalueManyproductsourcesVerylowdemandproductLowdemandproductMediumdemandproductHighdemandproductManufacturerstoragewithpickupDistributorstoragewithlastmiledeliveryDistributorStoragewithPackageCarrierDeliveryManufacturerStoragewithIn-TransitMergeManufacturerStoragewithDirectShippingRetailStoragewithCustomerPickup+2+2+2+2+2+2+2+2+2+2+1+1+1+1+1+1+1+1+1+1+1+1+1+1+10000000000-1-1-1-1-1-1-1-1-1-1-1-2-2-2-2-2-2-2-24-21IV.E-BusinessandtheDistributionNetwork1.ImpactofE-BusinessonCustomerService2.ImpactofE-BusinessonCost3.UsingE-Business:Dell,Amazon,Peapod,Grainger4-22V.DistributionNetworksinPractice1.Theownershipstructureofthedistributionnetworkcanhaveasbigasanimpactasthetypeofdistributionnetwork2.Thechoiceofadistributionnetworkhasverylong-termconsequences3.Considerwhetheranexclusivedistributionstrategyisadvantageous4.Product,price,commoditization,andcriticalityhaveanimpactonthetypeofdistributionsystempreferredbycustomers4-23VI.SummaryofLearningObjectives1.Whatarethekeyfactorstobeconsideredwhendesigningthedistributionnetwork?2.Whatarethestrengthsandweaknessesofvariousdistributionoptions?3.Whatrolesdodistributorsplayinthesupplychain?