Overview of Distribution in Supply Chain Networks (SCN)
Definition: Distribution encompasses the processes involved in moving and
storing products from suppliers to customers within the supply chain.
Importance: It significantly influences both supply chain costs and customer
experience, thus impacting overall profitability.
Examples: Companies like Walmart and 7-Eleven Japan exemplify successful
distribution strategies that enhance customer responsiveness and maintain low
costs.
Factors Influencing Distribution Network Design
Distribution network design is influenced by two primary categories:
Customer Service Factors
1. Response Time: The duration from order placement to delivery.
2. Product Variety: The range of different products available to customers.
3. Product Availability: The likelihood that a product is in stock when needed.
4. Customer Experience: The ease of finding, ordering, and receiving products.
5. Time to Market: Speed at which new products are introduced to customers.
6. Order Visibility: Ability to track order status throughout the supply chain.
7. Returnability: The ease with which customers can return products.
Supply Chain Cost Factors
1. Inventories: Costs associated with holding stock at various locations.
2. Transportation Costs:
o Inbound Costs: Typically lower due to full truckloads.
o Outbound Costs: Higher due to individual deliveries.
3. Facilities and Handling: Costs related to maintaining warehouses or retail
outlets.
4. Information Costs: Expenses for maintaining online platforms and
coordinating information flow.