Outline 2 The Role of Distribution in the

Outline ► ► ► 2 The Role of Distribution in the Supply Chain Factors Influencing Distribution Network Design Options for a Distribution Network The Value of Distributors in the Supply Chain Distribution Networks in Practice

The Role of Distribution in the Supply Chain ► Distribution: the steps taken to move and store a product from the supplier stage to the customer stage in a 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, Grainger Wikipedia 3

Factors Influencing 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 4

Factors Influencing Distribution Network Design ► Elements of customer service influenced by network structure: 》 Response time 》 Product variety 》 Product availability ► Supply chain costs affected by network structure: 》 Inventories 》 Transportation 》 Facilities and handling 》 Information 》 Customer experience PZB為 Parasuraman, Zeithaml和Berry 》 Order visibility （簡稱PZB）三位學者於 1985年所提出 》 Returnability 的服務品質衡量模式 5

Service and Number of Facilities Response Time 6

Factors Influencing Distribution Network Design ► Elements of customer service influenced by network structure: 》 Response time 》 Product variety 》 Product availability 》 Customer experience 》 Order visibility 》 Returnability 7 ► Supply chain costs affected by network structure: 》 Inventories 》 Transportation 》 Facilities and handling 》 Information

Service and Number of Facilities Response Time 8

Inventory Costs and Number of Facilities Inventory Costs Number of facilities 9

Transportation Costs and Number of Facilities Transportation Costs Number of facilities 10

Facility Costs and Number of Facilities Facility Costs Number of facilities 11

Total Costs Related to Number of Facilities Total Costs Facilities Inventory Transportation Number of Facilities 12

Variation in Logistics Costs and Response Time with Number of Facilities Response Time Total Logistics Costs Number of Facilities 13

Design Options for a Distribution Network ► 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 ► Selecting a Distribution Network Design 14

Manufacturer Storage with Direct Shipping Manufacturer Retailer Customers Product Flow Information Flow Flickr. com Mooi 15 Microsoft

Manufacturer Storage with Direct Shipping Cost Factor Performance Inventory Lower cost because of aggregation Low demand high value; product customization can be postponed Transportation Facilities and handling Information 16 High cost due to long distance and disaggregate shipping Lower facility cost; handling cost may lower if small shipment can be managed Significance investment in infrastructure to integrate the supplier and buyers

Manufacturer Storage with Direct Shipping Service factor 17 Performance Response time High response time, complicated receiving Product variety Easily provide high level variety Product availability Easily provide high level product availability Customer experience Good as home delivery but suffer as partial shipment from different suppliers Order visibility More difficult but more important Returnability Expensive and difficult to implement

In-Transit Merge Network Factories In-Transit Merge by Carrier Retailer Customers Product Flow Information Flow Wikipedia 18 Wikipedia

In-Transit Merge Network Cost Factor Performance Inventory Similar to drop-shipping Transportation Facilities and handling Information 19 Lower than drop-shipping Receiving cost lowers at customer; handling cost are higher drop-shipping Investment is higher than drop-shipping

In-Transit Merge Network Service factor 20 Performance Response time Similar to drop-shopping; may be higher Product variety Similar to drop-shopping Product availability Similar to drop-shopping Customer experience Better than drop-shopping because of single delivery Order visibility Similar to drop-shopping Returnability Similar to drop-shopping

Distributor Storage with Carrier Delivery Factories Warehouse Storage by Distributor/Retailer Customers Product Flow Information Flow 21 VECTORLOGO Wikipedia

Distributor Storage with Carrier Delivery Cost Factor 22 Performance Inventory Higher than manufacturer storage. Difference is not large for faster moving items Transportation Lower than manufacturer storage. Reduction is higher for faster moving items Facilities and handling Higher than manufacturer storage. Difference is large for slow-moving items Information Simple infrastructure

Distributor Storage with Carrier Delivery Service factor 23 Performance Response time Faster than manufacturer storage Product variety Lower than manufacturer storage Product availability Higher cost to provide the same level of product availability as manufacturer storage Customer experience Better than manufacturer storage with dropshipping Order visibility Easier than manufacturer storage Returnability Easier than manufacturer storage

Distributor Storage with Last Mile Delivery Factories Distributor/Retailer Warehouse Customers Product Flow Information Flow 24

Distributor Storage with Last Mile Delivery Cost Factor 25 Performance Inventory Higher than distributor storage with carrier delivery Transportation Very high cost given minimal scale economies. Higher than any other distribution option. Facilities and handling Higher than manufacturer storage or distribution with carrier delivery, but lower than a chain of retail stores. Information Similar to distributor storage with carrier delivery

Distributor Storage with Last Mile Delivery Service factor 26 Performance Response time Very quick. Same day to next day delivery. Product variety Easily provide high level variety Product availability Less than distributor storage with carrier delivery but larger than retail stores. Customer experience Very good, particularly for bulky items. Order visibility Easier to implement than manufacturer storage or distributor storage with carrier delivery Returnability Easier to implement than other options. Harder and more expensive than a retail network.

Manufacturer or Distributor Storage with Customer Pickup Factories Retailer Cross Dock DC Pickup Sites Customers 27 Customer Flow Product Flow Information Flow

Manufacturer or Distributor Storage with Customer Pickup Cost Factor 28 Performance Inventory Can match other options depending on the location of inventory Transportation Lower than the use of package carriers, especially if using an existing delivery network Facilities and handling Facility cost will be very higher if new facilities need to be built. The increase in handling cost at the pickup site is significant. Information Significance investment in infrastructure required

Manufacturer or Distributor Storage with Customer Pickup Service factor Response time Similar to carrier delivery with manufacturer or distributor storage. Same day delivery possible for items stored locally at pickup site Product variety Similar to other manufacturer or distributor storage options Product availability 29 Performance Customer experience Lower than other options. In high density area loss of convenience may be small Order visibility Difficult but essential Returnability Somewhat easier given that pickup location can handle returns

Retail Storage at Consumer Pickup Sites Cost Factor 30 Performance Inventory Higher than all other options Transportation Lower than all other options Facilities and handling Higher than all other options The increase in handling cost at the pickup site is significant for online and phone orders. Information Some investment in infrastructure required for online and phone orders.

Retail Storage at Consumer Pickup Sites Service factor Response time Same day pickup possible for items stored locally at pickup site Product variety Lower than all other options Product availability Customer experience Order visibility More expensive to provide than all other options. Returnability 31 Performance Related to whether shopping is viewed as a positive or negative experience by customer. Trivial in-store orders. Difficult, but essential, for online and phone orders. Easier than other options given that pickup location can handle returns

Comparative Performance of Delivery Network Designs Retail Storage with Customer Pickup 32 Manufacturer Storage with In. Direct Shipping Transit Merge Distributor Storage Distributor with Package Carrier storage with last Delivery mile delivery Manufacturer storage with pickup Response Time 1 4 4 3 2 4 Product Variety 4 1 1 2 3 1 Product Availability 4 1 1 2 3 1 Customer Experience 5 4 3 2 1 5 Order Visibility 1 5 4 3 2 6 Returnability 1 5 5 4 3 2 Inventory 4 1 1 2 3 1 Transportation 1 4 3 2 5 1 Facility & Handling 6 1 2 3 4 5 Information 1 4 4 3 2 5

Linking Product Characteristics and Customer Preferences to Network Design Retail Storage with Customer Pickup High demand product Medium demand product Low demand product Very low demand product Many product sources High product value Quick desired response High product variety Low customer effort 33 Manufacturer Storage with Direct Shipping Manufacturer Storage with In-Transit Merge Distributor Storage with Package Carrier Delivery Distributor storage with last mile delivery Manufacturer storage with pickup +2 -2 -1 0 +1 0 0 -1 +1 0 +1 -1 +1 -2 +2 +1 0 -2 +1 +1 -1 -1 +2 +1 0 -1 +2 +1 +1 0 -2 +2 -2 -2 -1 +1 -2 -1 +2 0 +1 0 +2 -2 +1 +2 +2 +2 -1

The Value of Distributors in the Supply Chain ► Distributing Consumer Goods in India: 》 Lower transportation cost and improve replenishment response time ► Distributing MRO Products: Maintenance, Repair, and Operation 》 Order unplanned, a few items with lower value 》 Aggregate safety inventory and consolidate outbound shipment ► Distributing Electronic Components: Microsoft。 》 Move components from manufacturers to small OEMs. 34

The Value of Distributors in the Supply Chain Reduce inbound cost Reduce outbound cost Reduce safety stock and inventory costs Stable order to manufacturers to allow effective production planning ► Provide better response time ► Offer one-stop shopping with products from several manufacturers ► ► 35

Distribution Networks in Practice ► The ownership structure of the distribution network can have as big as an impact as the type of distribution network ► The choice of a distribution network has very long-term consequences ► Consider whether an exclusive distribution strategy is advantageous ► Product, price, commoditization, and criticality have an impact on the type of distribution system preferred by customers 36

版權聲明 頁碼 37 作品 授權條件 作者/來源 3, 18 Wikimedia Commons 本作品轉載自 http: //commons. wikimedia. org/wiki/File: Dell_Logo. png，瀏 覽日期 2011/12/28。 15 Flickr. com，作者：Mooi。 (http: //www. flickr. com/photos/mooitw/4086539757/sizes/t/i n/photostream/)，本作品採取創用CC「姓名標示－非商業性－相 同方式分享」2. 0版授權釋出。 15 本作品轉載自Microsoft Office 2007多媒體藝廊，依據 Microsoft 服務合約及著作權法第 46、52、65條合理使用。 18 本作品轉載自WIKIPEDIA (http: //en. wikipedia. org/wiki/File: Amazon. com-Logo. svg)， 瀏覽日期 2011/11/29。 21 VECTORLOGO(http: //www. allfreelogo. com/logo/hp-logo. html) 本作品轉載自VECTORLOGO網站，依據其版權聲明 (http: //www. allfreelogo. com/privacy-policy/)與著作權法第 46、52、65條合理使用。 21 本作品轉載自WIKIPEDIA (http: //zh. wikipedia. org/wiki/File: IBM_logo. svg)，瀏覽日 期 2012/3/8。 21 本作品轉載自WIKIPEDIA (http: //en. wikipedia. org/wiki/File: Toshiba_logo. svg)，瀏 覽日期 2011/11/29。