Role of Delivery System PDF

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. Presented by: Chef Reinald Andaya, DBM-HM What is the difference of Distribution Chain and Supply Chain? A supply chain is...

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. Presented by: Chef Reinald Andaya, DBM-HM What is the difference of Distribution Chain and Supply Chain? A supply chain is the system through which an organization acquires raw material, produces products, and delivers the products and services to its customers.... On their way from producers to end users and consumers, products pass through a series of marketing entities known as a distribution channel. Distribution management manages the supply chain for a firm, from vendors and suppliers to manufacturer to point of sale, including packaging, inventory, warehousing, and logistics. Distribution management helps keep things organized and keeps customers satisfied. Distribution Distribution occurs between every pair of stages in the supply chain. Raw materials and components are moved from suppliers to manufacturers, whereas finished products are moved from the manufacturer to the end consumer Distribution 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 The appropriate distribution network can be used to achieve a variety of supply chain objectives ranging from low cost to high responsiveness. A poor distribution network can hurt the level of service that customers receive while increasing the cost. An inappropriate network can have a significant negative effect on the profitability of the firm FACTORS INFLUENCING DISTRIBUTION NETWORK DESIGN Customer service measures that are influenced by the structure of the distribution network Response time- the amount of time it takes for a customer to receive an order Product variety - the number of different products/configurations that are offered by the distribution network Product availability - the probability of having a product in stock when a customer order arrives 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 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 - the time it takes to bring a new product to the market Order visibility - the ability of customers to track their orders from placement to delivery. Returnability - the ease with which a customer can return unsatisfactory merchandise and the ability of the network to handle such returns Managers must make two key decisions when designing a distribution network: DESIGN OPTIONS FOR A DISTRIBUTION NETWORK 1. Will product be delivered to the customer location or picked up from a preordained site? 2. Will product flow through an intermediary (or intermediate location)? A firm must evaluate the impact on customer service and cost as it compares different distribution network options Changing the distribution network design affects the following supply chain costs Inventories - firms try to consolidate and limit the number of facilities in their supply chain network Transportation – Inbound transportation costs - costs incurred in bringing material into a facility Outbound transportation costs - costs of sending material out of a facility. Facilities and handling - facility costs decrease as the number of facilities is reduced because a consolidation of facilities allows a firm to exploit economies of scale. Information - Six distinct distribution network designs may be used to move products from factory to customer, which are classified as follows: 1. Manufacturer storage with direct shipping 2. Manufacturer storage with direct shipping and intransit merge 3. Distributor storage with package carrier delivery 4. Distributor storage with last-mile delivery 5. Manufacturer/distributor storage with costumer pickup 6. Retail storage with customer pickup Strengths and weaknesses of various distribution options Distribution networks that carry local inventory are suitable for products with high demand, especially if transportation is a large fraction of total cost. An e-business allows a firm to offer greater product variety and improve product availability by centralizing inventories. This is especially beneficial for lowvolume, high-variety products. Distribution networks that ship directly to the customer are better suited for a large variety of high-value products that have low and uncertain demand. How e-business has affected the design of distribution networks in various industries An e-business also improves the customer experience by providing 24-hour access and allowing a more customized experience. Selling a product online, however, increases the response time relative to a retail store. These networks carry low levels of inventory but incur high transportation cost and provide a slow response time. The rise of e-businesses has affected both customer service and costs in supply chains An e-business reduces facility costs if there is no significant loss of customer participation. Transportation costs increase, however, and this is particularly significant for low-value products with predictable demand An e-business has been most effective for highvalue products with uncertain demand, when customers are willing to wait some time before delivery.