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Ch04 - Distribution Network Types
Ch04 - Distribution Network Types
Ch04 - Distribution Network Types
MANAGEMENT
LECTURE 4
Response Time
04-Feb-23 Dr. Surya Prakash, Supply Chain Expert 8
Amazon turns inventory 12 times a year
Inventory
Costs
Number of facilities
Number of facilities
Number of facilities
Total Costs
Total Costs
Facilities
Inventory
Transportation
Number of Facilities
04-Feb-23 Dr. Surya Prakash, Supply Chain Expert 12
DESIGN OPTIONS FOR A DISTRIBUTION
NETWORK
Manufacturer
Retailer
Customers
Customer Good for home delivery but can suffer if order from several
Experience manuf. is sent as partial shipment
Time to market Fast
Order Visibility Difficult
Customers
Factories
Warehouse Storage by
Distributor/Retailer
Customers
Higher inventory
Suitable for products with higher demand
Amazon stores medium & fast moving products at
their warehouse
Less transp. cost for FM goods as compared to
manuf. storage
Less complex information infrastructure as
distributor acts as buffer b/w manuf. & customer
Factories
Distributor/Retailer
Warehouse
Customers
Grocery & milk delivery
Product Flow
Information Flow
Product variety Lower than package delivery but larger than retail stores
Pickup Sites
Customers
Most traditional
Inventory stored at retail stores
W.W Grainger (B2B) & Albertsons –Grocery (B2C)
Response Time Same day (immediate) pickup possible for items stored
locally at pick up site
Product variety Lower than all other options
Order Visibility Trivial for in store orders. Difficult for online or phone
orders
Returnability Easiest
Product Variety
4 1 1 2 3 1
Product Availability 2 3
4 1 1 1
Customer 5 4 3 2 1 5
Experience
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
Value of setting up an E-Business may not be same . E.g: Dell & Webvan