Distribution Facilities Role and Function PDF

The Role and Functions of Distribution Facilities  Warehouse is a facility in the supply chain to consolidate products / materials to reduce transportation cost, achieve economies of scale in manufacturing or in purchasing or provide value-added processes and shorten response time  Warehousi...

The Role and Functions of Distribution Facilities  Warehouse is a facility in the supply chain to consolidate products / materials to reduce transportation cost, achieve economies of scale in manufacturing or in purchasing or provide value-added processes and shorten response time  Warehousing is the process of storing goods or raw materials in a warehouse for the purpose of distribution, sale, or manufacturing.  Distribution process of moving the products from the manufacturer or supplier to the end consumer. “ Distribution channel is viewed as one of the key operations element where companies can provide tailored services for their customers and gain competitive advantage” The Role of Distribution Facilities in SCM 7 Promote Enhance transport customer 1 economies service 6 Fulfill omni- Balance channel supply & demand demand 2 Support Protect 5 production against require- Allow uncertainty ments quantity purchase discounts 3 4 2 Distribution Facility Functionality 1. Accumulation Primary 2. Sortation Functions 3. Allocation 4. Assortment Distribution Facility Assembly Services Functionality Product kitting Inventory Management Value- Product postponement Adding Sequencing Roles Quality Control Recycle / Returns 3  Primary Function: Accumulation The DC serves as a collection point for product coming from multiple origins and provides required transfer, storage, or processing services, allowing firms to consolidate orders and shipments for production and fulfillment processes. 4  Primary Function: Accumulation Direct Delivery – No Accumulation DC – Accumulation 5  Cost Importance of Distribution Center A B A B With “A” vendors and B stores the There are only A+B shipments through an transportation plan consists of AxB intermediate aggregator, such as a direct shipments, each relatively small distribution center or cross dock. shipment and likely subject to the higher, less- is larger and more likely to qualify for the than-truckload. lower, full-truckload rates.  Primary Function: Sortation  Sortation focuses on assembling like products together for storage in the distribution facility, processing or transfer to customers.  Proper sortation is essential for effective inventory & order fulfillment. 7  Primary Function: Allocation  Allocation focuses on matching available inventory to customer orders for an SKU.  This break-bulk capacity promotes product availability for multiple customers and in desired quantities. 8  Primary Function: Assortment  Assortment involves the assembly of customer orders for multiple SKUs held in the distribution facility.  This mixing capability avoids the expenses related to placing numerous orders and having them shipped from a variety of locations. 9  Primary Function: Assortment Supplier ships DC Retailer receives in bulk mixes & ships variety 10  Value-Added Roles of Distribution Value-Adding Roles Facilities  Assembly services  Inventory management and visibility  Product kitting, bundling, and unbundling  Product postponement  Production sequencing  Quality control  Recycling, repair, and returns management 11 Source: Brian J. Gibson, Ph.D. 12