The document discusses logistics channels and network configuration. It defines direct and indirect distribution channels and the roles of intermediaries. The objective of logistics network design is to minimize annual system-wide costs while meeting service requirements. Key issues in network design include facility location and size, sourcing strategies, and distribution channels. Mapping and data are important components for network design tools to visualize solutions and quantify costs. Customers are often aggregated into zones to simplify network planning while balancing accuracy and complexity.

1. Lecturer: Max Galarza
Students:
Sergio Rosero
Gabriela Rosero
Jocelyne Barrera
Kelly Zambrano
Javier Mackliff
Course: 6th A
Grade: 10
Date: August 26, 2015
LOGISTICS II

3. • The path through which goods and
services travel from the vendor to the
consumer or payments for those products
travel from the consumer to the vendor.
• Can be as short as a direct transaction
from the vendor to the consumer, or may
include several interconnected
intermediaries along the way such as
wholesalers, distributers, agents and
retailers.

4. • Channels are broken into direct and
indirect forms.
• It is necessary to determine correctly the
channel you are going to use, so the
company can supply the customer needs.

5. Direct and Indirect channels
• "direct" channel allowing the consumer to buy the good
from the manufacturer
• "indirect" channel allowing the consumer to buy the good
from a wholesaler.
• Direct channels are considered "shorter" than "indirect"
ones.

6. Rol of intermediaries
• Own the product at the time and facilitating the
transfer of ownership of the product
• Consumer search
• Provider search
• Storage
• Price equilibrium
• Financing
• Services
• Packaging of
• Product approach
• Promotion

7. Brokers commitments with
producers
• Determination of prices
• General conditions of sale
• Definition of the geographic area
• Specification of all the details
• So on brokers can determine
the risk of the transportation of
the goods.

8. Design of distribution channels
It requires a well-organized method for designing
channels that satisfy customers and overcome
competition. There are 4 choices:
1. Specify the distribution function
2. Select the type of channel
3. To determine the intensity distribution
4. Select specific members of the channel

9. LOGISTICS NETWORK
CONFIGURATION

10. The Logistics Network
The Logistics Network consists of:
• Facilities:
Vendors, Manufacturing Centers, Warehouse/
Distribution Centers, and Customers
• Raw materials and finished products that flow
between the facilities.

11. Network Design: Key Issues
• Pick the optimal number, location, and size of
warehouses and/or plants.
• Determine optimal sourcing strategy
• Which plant/vendor should produce which product
• Determine best distribution channels
• Which warehouses should service which customers

12. OBJECTIVE OF LOGISTICS
MANAGEMENT
Design or configure the logistics
network so as to minimize annual
system-wide cost subject to a variety
of service level requirements

13. Network Design: Key Issues
The objective is to balance service
level against
• Production/ purchasing costs
• Inventory carrying costs
• Facility costs (handling and fixed
costs)
• Transportation costs
That is, we would like to find a
minimal-annual-cost configuration
of the distribution network that
satisfies product demands at
specified customer service levels.

14. Network Design Tools:
Major Components
• Mapping
• Mapping allows you to visualize your supply chain and solutions
• Mapping the solutions allows you to better understand different
scenarios
• Color coding, sizing, and utilization indicators allow for further
analysis
• Data
• Data specifies the costs of your supply chain
• The baseline cost data should match your accounting data
• The output data allows you to quantify changes to the supply chain
• Engine
• Optimization Techniques

15. Mapping Allows You to Visualize Your
Supply Chain

16. Data for Network Design
1. A listing of all products
2. Location of customers, stocking points and sources
3. Demand for each product by customer location
4. Transportation rates
5. Warehousing costs
6. Shipment sizes by product
7. Order patterns by frequency, size, season, content
8. Order processing costs
9. Customer service goals

17. Customers and Geocoding
• Sales data is typically collected on a by-customer basis
• Network planning is facilitated if sales data is in a geographic database
rather than accounting database
1. Distances
2. Transportation costs
• New technology exists for Geocoding the data based on Geographic
Information System (GIS)

18. Aggregating Customers
• All customers within a single cell or a single
cluster are replaced by a single customer
located at the center of the cell or cluster.
We refer to a cell or a cluster as a customer
zone.

19. Impact of Aggregating Customers
• The customer zone balances
1. Loss of accuracy due to over aggregation
2. Needless complexity
• What affects the efficiency of the aggregation?
1. The number of aggregated points, that is the number of
different zones
2. The distribution of customers in each zone.
3. Reduction of transportation costs

20. Displaying the Solutions Allows you
To Compare Scenarios
Is not the same to have a massive production and send it to all the country, than
Having a low production and assume the costs of sending to everywhere.

21. Netgraphy
• http://es.slideshare.net/laubalez/logistics-distribution-channel
• http://info.cba.ksu.edu/ehie/Faculty Site Templates/MANGT
662/Logistics Network Lecture.ppt
• http://www.inboundlogistics.com/cms/article/using-social-networking-
for-logistics/