1.
Distribution Network
in a Supply Chain
SATHASIVAM. K
M.E.(SEOR) 200836315
Anna University

2.
Distribution Network
in a Supply Chain
 Objectives
 The Role of Distribution in the SC
 Factors Influencing Distribution Network Design
 Design Options for a Distribution Network
 The Value of Distribution in the SC
 Distribution Networks in Practice
 Summary of Learning Objectives

3.
Distribution Network
in a Supply Chain
 The Role of Distribution in the SC
 Distribution – The steps taken to move and store a
product from the supplier stage to a customer stage
in the SC
 Distribution directly affects cost and the customer
experience and therefore drives profitability
 Low cost to high responsiveness
 Example – Wal-Mart, Dell, P&G

4.
Distribution Network
in a Supply Chain
 Factors Influencing Distribution Network Design
 Two Dimensions –
 Customer needs that are met
 Cost of meeting customer needs

5.
Distribution Network
in a Supply Chain
 Design Options for a Distribution Network
 Mannufacturer storage with direct shipping
Manufacturer
Retailer
Customers
Product Flow
Information Flow

6.
Distribution Network
in a Supply Chain
 Design Options for a Distribution Network
 Mannufacturer storage with direct shipping (contd...)
Cast Factor Performance
Inventory Low Costs
Transportation Higher Transportation costs
Facilities and handing Lower facility costs
Service Factor Performance
Response time High response time
Product variety high level of variety
Product availability high level of product availability

7.
Distribution Network
in a Supply Chain
 Design Options for a Distribution Network
 Mannufacturer storage with direct shipping and In-
Transit Merge
Factories
Retailer
Product Flow
In-Transit Merge by
Carrier
Customers

8.
Distribution Network
in a Supply Chain
 Design Options for a Distribution Network
 Mannufacturer storage with direct shipping and In-Transit Merge
(contd...)
Cast Factor Performance
Inventory Drop-shipping
Transportation lower Transportation costs
Facilities and handing Higher facility costs
Service Factor Performance
Response time High response time
Product variety high level of variety
Product availability high level of product availability

9.
Distribution Network
in a Supply Chain
 Design Options for a Distribution Network
 Distributor Storage with Carrier Delivery
Factories
Customers
Product Flow
Information Flow
Warehouse Storage by
Distributor/Retailer

10.
Distribution Network
in a Supply Chain
 Design Options for a Distribution Network
 Distributor Storage with Carrier Delivery (contd...)
Cast Factor Performance
Inventory Higher than Manufacturere storage
Transportation Lower than Manufacturere storage
Facilities and handing Higher than Manufacturere storage
Service Factor Performance
Response time Faster than Manufacturere Storage
Product variety Lower than Manufacturere storage
Product availability high level of product availability

11.
Distribution Network
in a Supply Chain
 Design Options for a Distribution Network
 Distributor Storage with Last Mile Delivery
Factories
Customers
Product Flow
Information Flow
Warehouse Storage by
Distributor/Retailer

12.
Distribution Network
in a Supply Chain
 Design Options for a Distribution Network
 Distributor Storage with Carrier Delivery (contd...)
Cast Factor Performance
Inventory Higher than Distributor storage with package carrier delivery
Transportation very high cost
Facilities and handing Higher than Manufacturere storage
Service Factor Performance
Response time Very Quick
Product variety Lower than Manufacturere storage
Product availability More expensive to provide availability

13.
Distribution Network
in a Supply Chain
 Design Options for a Distribution Network
 Manufacturer or Distributor Storage with Consumer
Pickup
Factories
Retailer
Pickup Sites
Product Flow
Information Flow
Cross Dock DC
Customer Flow
Customers

14.
Distribution Network
in a Supply Chain
 Design Options for a Distribution Network
 Manufacturer or Distributor Storage with Consumer Pickup
(contd...)
Cast Factor Performance
Inventory Can match any other option depending on the location
Transportation Lower than the use of package carriers
Facilities and handing Very high if new facilities
Service Factor Performance
Response time Similar to carrier delivery
Product variety Similar to other manufacturer
Product availability Similar to other manufacturer

15.
Distribution Network
in a Supply Chain
 Design Options for a Distribution Network
 Retail Storage with Customer Pickup
 Inventory is stored locally at retail stores
Cast Factor Performance
Inventory Higher than all other options
Transportation Lower than all other options
Facilities and handing Higher than all other options
Service Factor Performance
Response time Same day pickup possible for items stored locally at pick up site
Product variety Lower than all other options
Product availability More Expensive to provide than all other options

16.
Distribution Network
in a Supply Chain
 The Value of Distributors in the SC
 Distributing Consumer Goods in India
 Small replenishment lot size
 Lowering transportation cost
 Improving replensihment response time
 Distributing MRO Products
 Emergency in small quantities

17.
Distribution Network
in a Supply Chain
 The Value of Distributors in the SC
 Distributing Electronic Components
 Improvement in SC performance
 Reduction in inbound transportation cost
 Reduction in inventory costs
 Lower cost by planning production more effectively
 Inventory closer to the point of sale
 One-stop shopping
 ergency in small quantities