Chapter 7


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Chapter 7

  1. 1. Distribution and Logistics KIM, SUNG-HAN ( ACE Lab, IT Business, ICU
  2. 2. Learning Objective <ul><li>To understand the basics of supply chains </li></ul><ul><li>To understand how the Internet affects supply chains </li></ul><ul><li>To learn about the four stages of supply chain evolution </li></ul><ul><li>To understand the basics of distribution channels </li></ul><ul><li>To examine e-fulfillment issues for online retailers </li></ul>
  3. 3. Introduction <ul><li>What is a supply chain? </li></ul><ul><ul><li>A supply chain consists of a company’s links to other corporations that help it deliver products to the individual consumer. </li></ul></ul>
  4. 4. Flows within a Supply Chain <ul><ul><li>Physical goods </li></ul></ul><ul><ul><li>Money </li></ul></ul><ul><ul><li>Information </li></ul></ul><ul><li>Three flows exist within a supply chain: </li></ul>
  5. 5. Flows within a Supply Chain (continued) <ul><li>What is the “bullwhip effect?” </li></ul><ul><ul><li>Even though customer demand may be relatively stable, one observes greater variability in orders as one moves up a supply chain. </li></ul></ul>( Source: )
  6. 6. Benefits of Internet Technology <ul><li>How can the Internet technology help supply chain management? </li></ul><ul><ul><li>By allowing participants in a supply chain to share knowledge . </li></ul></ul><ul><ul><li>Companies can respond faster to changes in customer demand. </li></ul></ul><ul><ul><li>By helping companies reduce the costs of serving a market. </li></ul></ul>
  7. 7. Four Stages of SCM Evolution <ul><li>Four stages – traditional, integrated, collaboration, and synchronization: </li></ul><ul><ul><li>Traditional supply chain – each company thinks of itself as an island that does not have to share any information with the others . </li></ul></ul><ul><ul><li>Integrated supply chain – there is information sharing within the business functions of a company; however, there is no information sharing with outside firms . </li></ul></ul><ul><ul><li>Collaborative supply chain – there is broader information sharing with suppliers and customers. </li></ul></ul><ul><ul><li>Synchronized supply chain – distinguishes itself from the collaborative supply chain by even greater dependence – The goal is not just to share information, but also to synchronize operations . </li></ul></ul>
  8. 8. Introduction to the Distribution Channel <ul><li>Distribution channel – defined: </li></ul><ul><ul><li>The distribution channel is the portion of the supply chain that stretches from the manufacturer to the consumer. </li></ul></ul><ul><li>A company needs intermediaries for the following reasons: </li></ul><ul><ul><li>They reduce the cost of distribution. </li></ul></ul><ul><ul><li>They shield manufacturers from risk. </li></ul></ul><ul><ul><li>They help manufacturers target products. </li></ul></ul><ul><ul><li>They structure information essential to consumers. </li></ul></ul>
  9. 9. E-Fulfillment-The Greatest Challenge to E-Tailers <ul><li>Four E-Fulfillment Strategies: </li></ul><ul><ul><li>Logistics postponement is a good strategy when markets are turbulent. </li></ul></ul><ul><ul><li>Resource exchange strategy is important when distances are large. </li></ul></ul><ul><ul><li>Leveraged shipments fulfillment strategy is important when order size is small and consumers are distributed geographically. </li></ul></ul><ul><ul><li>Bricks-and-clicks is effective if product returns are expected. </li></ul></ul>
  10. 10. E-Fulfillment-The Greatest Challenge (continued) <ul><li>E-Fulfillment Delivery Models: </li></ul><ul><ul><li>Direct to consumer – the consumer places an order with an online retailer, which has the product in stock and ships it to the consumer. </li></ul></ul><ul><ul><li>Consumer direct – the consumer orders from either an online retailer or from the manufacturer’s web site. </li></ul></ul><ul><ul><li>Sell-source-ship – the order is placed at an online retailer, then passed on to the manufacturer, who ships to the retailer’s distribution center. </li></ul></ul>
  11. 11. E-Fulfillment-The Greatest Challenge (continued) <ul><li>Organizing for E-Fulfillment: </li></ul><ul><ul><li>What aspects of the operation are centralized and those that are decentralized. </li></ul></ul><ul><ul><li>Which aspects are conducted internally and which are outsourced. </li></ul></ul>
  12. 12. E-Fulfillment-The Greatest Challenge (continued) <ul><li>Factors to Consider When Designing an E-Fulfillment System: </li></ul><ul><ul><li>The true costs of online fulfillment must be measured, and a plan must be developed to lower all costs. </li></ul></ul><ul><ul><li>The possibility of having a competitive advantage regarding time to delivery and customer service. </li></ul></ul>
  13. 13. E-Fulfillment-The Greatest Challenge (continued) <ul><li>Factors to Consider When Designing an E-Fulfillment System: (continued) </li></ul><ul><ul><li>Create a plan for the integration of the web site and the back-end processes. </li></ul></ul><ul><ul><li>Do not assume that existing logistics operations are well suited for e-tailing and that existing suppliers can meet all needs. </li></ul></ul>
  14. 14. <ul><li>Thank you! </li></ul>