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Distribution Network Design Strategies

The document discusses the importance of distribution in the supply chain, highlighting its role in moving products from suppliers to customers and its impact on cost and customer experience. It outlines factors influencing distribution network design, including customer service elements and supply chain costs. Various design options for distribution networks are presented, such as manufacturer storage with direct shipping and distributor storage with last mile delivery.

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2 views14 pages

Distribution Network Design Strategies

The document discusses the importance of distribution in the supply chain, highlighting its role in moving products from suppliers to customers and its impact on cost and customer experience. It outlines factors influencing distribution network design, including customer service elements and supply chain costs. Various design options for distribution networks are presented, such as manufacturer storage with direct shipping and distributor storage with last mile delivery.

Uploaded by

amenazahanmati
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Distribution 1

Management
Designing Distribution Structures

STANLEY RODRICK
ASSISTANT PROFESSOR,
DEPARTMENT OF MARKETING, FBA, AIUB
2
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.
 Raw materials and components are moved from suppliers
to manufacturers, whereas finished products are moved
from the manufacturer to the end consumer.
3
The Role of Distribution in
the Supply Chain

 Distribution directly affects cost and the customer


experience and therefore drives profitability
 Choice of distribution network can achieve supply chain
objectives from low cost to high responsiveness
 Examples: Wal-Mart, Dell, Proctor & Gamble and others
Factors Influencing 4
Distribution Network Design

 Distribution network performance evaluated along


two dimensions at the highest level:
 Customer needs that are met
 Cost of meeting customer needs
 Distribution network design options must
therefore be compared according to their impact
on customer service and the cost to provide this
level of service
Factors Influencing 5
Distribution Network Design

 Elements of customer service influenced by


network structure:
 Response time
 Product variety
 Product availability
 Customer experience
 Order visibility
 Returnability
Factors Influencing 6
Distribution Network Design

 Supply chain costs affected by network structure:


 Inventories
 Transportation
 Facilities and handling
 Information
Design Options for a 7
Distribution Network

 Manufacturer Storage with Direct Shipping


 Manufacturer Storage with Direct Shipping
and In-Transit Merge
 Distributor Storage with Carrier Delivery
 Distributor Storage with Last Mile Delivery
 Manufacturer or Distributor Storage with
Consumer Pickup
 Retail Storage with Consumer Pickup
Design Options for a 8
Distribution Network

 Manufacturer Storage with Direct Shipping

Manufactur
er

Retaile
r

Customers

Product
Flow
Information
Design Options for a 9
Distribution Network

 Manufacturer Storage with Direct Shipping and In-Transit


Merge
Factories

Retaile In-Transit Merge by


r Carrier

Customer
s
Product Information
Design Options for a 1
0
Distribution Network
 Distributor Storage with Carrier Delivery
Factories

Warehouse Storage by
Distributor/Retailer

Customer
s
Product Information
Design Options for a 1
1
Distribution Network

 Distributor Storage with Last Mile Delivery

Factories

Distributor/
Retailer
Warehouse

Customer
s
Product Information
Design Options for a Distribution Network1
2
 Manufacturer or Distributor Storage with Consumer
Pickup

Factories

Customer Flow
Retaile Distribut Product Flow
r or Information
Flow

Pickup Sites

Customer
Design Options for a 1
3
Distribution Network

 Retail Storage with Consumer Pickup

Factories

Distributor

Factory Outlet
Wholesaler
Customer Flow
Product Flow
Information Retailer
Flow

Customer
s
1
4

END OF THE CHAPTER

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