Designing the Supply Chain Network (1).pdf

Designing the Supply Chain Network Presented by: Chef Reinald A. Andaya, DBM-HM. THE ROLE OF DISTRIBUTION IN THE SUPPLY CHAIN Distribution refers to the steps taken to move and store a product from the supplier stage to a customer stage in the supply chain Distribution occurs between every pair of s...

Designing the Supply Chain Network Presented by: Chef Reinald A. Andaya, DBM-HM. THE ROLE OF DISTRIBUTION IN THE SUPPLY CHAIN Distribution refers to the steps taken to move and store a product from the supplier stage to a customer stage in the supply chain Distribution occurs between every pair of stages in the supply chain Distribution is a key driver of the overall profitability of a firm because it affects both the supply chain cost and the customer experience directly. FACTORS INFLUENCING DISTRIBUTION NETWORK DESIGN At the highest level, performance of a distribution network should be evaluated along two dimensions 1. Customer needs that are met 2. Cost of meeting customer needs Response time is the amount of time it takes for a customer to receive an order Product variety is the number of different products/configurations that are offered by the distribution network Product availability is the probability of having a product in stock when a customer order arrives Customer experience includes the ease with which customers can place and receive orders as well as the extent to which this experience is customized A firm must evaluate the impact on customer service and cost as it compares different distribution network options The customer needs that are met influence the company's revenues, which along with cost decide the profitability of the delivery network Customer experience includes the ease with which customers can place and receive orders as well as the extent to which this experience is customized Time to market is the time it takes to bring a new product to the market. Order visibility is the ability of customers to track their orders from placement to delivery. Returnability is the ease with which a customer can return unsatisfactory merchandise and the ability of the network to handle such returns. The appropriate distribution network can be used to achieve a variety of supply chain objectives ranging from low cost to high responsiveness There are products/services that are distributed directly to the customers and there are products that can be obtained from resellers only A poor distribution network can hurt the level of service that customers receive while increasing the cost Measures that are influenced by the structure of the distribution network 1. 2. 3. 4. 5. 6. 7. Response time Product variety Product availability Customer experience Time to market Order visibility Returnability Changing the distribution network design affects the following supply chain costs 1. 2. 3. 4. Inventories Transportation Facilities and handling Information To decrease inventory costs, firms try to consolidate and limit the number of facilities in their supply chain network