Distribution Network in a Supply Chain

SATHASIVAM. K

M.E.(SEOR) 200836315

Anna University

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

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

Distribution Network in a Supply Chain

Factors Influencing Distribution Network Design Two Dimensions –

Customer needs that are met Cost of meeting customer needs

Distribution Network in a Supply Chain

Design Options for a Distribution Network Mannufacturer storage with direct shipping

Manufacturer

Retailer

Customers

Product Flow

Information Flow

Distribution Network in a Supply Chain

Design Options for a Distribution Network Mannufacturer storage with direct shipping (contd...)

Cast Factor PerformanceInventory Low CostsTransportation Higher Transportation costsFacilities and handing Lower facility costs

Service Factor PerformanceResponse time High response timeProduct variety high level of varietyProduct availability high level of product availability

Distribution Network in a Supply Chain

Design Options for a Distribution Network Mannufacturer storage with direct shipping and In-

Transit MergeFactories

Retailer

Product Flow

In-Transit Merge by Carrier

Customers

Distribution Network in a Supply Chain

Design Options for a Distribution Network Mannufacturer storage with direct shipping and In-Transit Merge

(contd...)

Cast Factor PerformanceInventory Drop-shippingTransportation lower Transportation costsFacilities and handing Higher facility costs

Service Factor PerformanceResponse time High response timeProduct variety high level of varietyProduct availability high level of product availability

Distribution Network in a Supply Chain

Design Options for a Distribution Network Distributor Storage with Carrier Delivery

Factories

Customers

Product FlowInformation Flow

Warehouse Storage by Distributor/Retailer

Distribution Network in a Supply Chain

Design Options for a Distribution Network Distributor Storage with Carrier Delivery (contd...)

Cast Factor PerformanceInventory Higher than Manufacturere storageTransportation Lower than Manufacturere storageFacilities and handing Higher than Manufacturere storage

Service Factor PerformanceResponse time Faster than Manufacturere StorageProduct variety Lower than Manufacturere storageProduct availability high level of product availability

Distribution Network in a Supply Chain

Design Options for a Distribution Network Distributor Storage with Last Mile Delivery

Factories

Customers

Product FlowInformation Flow

Warehouse Storage by Distributor/Retailer

Distribution Network in a Supply Chain

Design Options for a Distribution Network Distributor Storage with Carrier Delivery (contd...)

Cast Factor PerformanceInventory Higher than Distributor storage with package carrier deliveryTransportation very high costFacilities and handing Higher than Manufacturere storage

Service Factor PerformanceResponse time Very QuickProduct variety Lower than Manufacturere storageProduct availability More expensive to provide availability

Distribution Network in a Supply Chain

Design Options for a Distribution Network Manufacturer or Distributor Storage with Consumer

Pickup

Factories

Retailer

Pickup Sites

Product FlowInformation Flow

Cross Dock DC

Customer Flow

Customers

Distribution Network in a Supply Chain

Design Options for a Distribution Network Manufacturer or Distributor Storage with Consumer Pickup

(contd...)

Cast Factor PerformanceInventory Can match any other option depending on the locationTransportation Lower than the use of package carriersFacilities and handing Very high if new facilities

Service Factor PerformanceResponse time Similar to carrier deliveryProduct variety Similar to other manufacturerProduct availability Similar to other manufacturer

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 PerformanceInventory Higher than all other optionsTransportation Lower than all other optionsFacilities and handing Higher than all other options

Service Factor PerformanceResponse time Same day pickup possible for items stored locally at pick up siteProduct variety Lower than all other optionsProduct availability More Expensive to provide than all other options

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

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