1. Distribution role in supply chain
1.1. Meaning
1.1.1. Distribution is the step in which a product is transported from the supplier stage to the customer stage in the supply chain. Distribution happens in between every stages in the supply chain with raw materials and components transported from supplier to the manufacturers and products transported from the manufacturers to the consumer.
1.2. Distribution network designing process
1.2.1. First Phase
1.2.1.1. Deciding the number of stages in the supply chain and assigning the role and purpose of each stage
1.2.2. Second Phase
1.2.2.1. Detailing the process and the stages from phase one and specifying their locations and their capability, capacity, and demand allocation
2. Influencing factors to distribution network design
2.1. Value provided to the customer
2.1.1. Response Time
2.1.1.1. The amount of time it takes for a customer to achieve their order
2.1.2. Product Variety
2.1.2.1. The number of products or configurations that the distribution network offer
2.1.3. Product Availabilty
2.1.3.1. The probability of having a product in stock when order arrives
2.1.4. Customer Experience
2.1.4.1. The ease in which customers can place and receive their order. This experience can be catered to the customer needs.
2.1.5. Time to Market
2.1.5.1. The time that it takes to market a new product to the existing market
2.1.6. Order Visibility
2.1.6.1. The ability of customer to track the order from the moment they place the order to the moment the receive it
2.1.7. Returnability
2.1.7.1. The ability of the network to handle return by customer when the product is unsatisfactory
2.2. Cost of meeting customer needs
2.2.1. Inventory (logistic cost)
2.2.1.1. The inventory cost increases in parallel with the increase of facilities in the supply chain network (Increase in holding cost)
2.2.1.2. To control the increase of inventory cost, firm try to consolidate and limit the facilities in their supply chain network
2.2.2. Transportation (logistic cost)
2.2.2.1. Inbound transportation cost
2.2.2.1.1. The cost of bringing material into facilities
2.2.2.1.2. Inbound cost per unit tend to be lower due to the larger size of the lot
2.2.2.2. Outbound transportation cost
2.2.2.2.1. the cost of sending material out of facilities
2.2.2.2.2. Outbound cost per unit tend to be higher due to the smaller size of the lot
2.2.3. Facilities and Handling (logistic cost)
2.2.3.1. Facilities cost can be reduced by reducing the amount of facilities
2.2.4. Information
2.2.4.1. Higher quality information on customer preferences allows the firm to prepare the availability of the product through better aggregate planning
2.3. Total Logistic Cost
2.3.1. The sum of Inventory cost, Transportation cost, and Facility cost in a supply chain network.
3. Distribution network design option
3.1. Two key decisions for designing distribution networks
3.1.1. will the product delivered to the customer or picked up at a prearranged site
3.1.2. Will the product flow through intermediate location?
3.2. Design type
3.2.1. Manufacturer storage with direct shipping
3.2.2. Manufacturer storage with direct shipping and in-transit merge
3.2.3. Distributor storage with carrier delivery
3.2.4. Distributor storage with last mile delivery
3.2.5. Manufacturer/distributor storage with customer pickup
3.2.6. Retail storage with customer pickup
3.3. Selecting a distribution network design
3.3.1. Only niche companies end up using single distribution network
3.3.2. Most companies used a combination of delivery network
3.3.3. The combination depends on the product characteristics and the strategic position that the form is targeting
3.3.4. The suitability of delivery designs (from a supply chain perspective) is based on multiple variables and situations
4. Online sales and Online distribution network
4.1. Impact of Online Sales to Customer Service
4.1.1. Response time to customer
4.1.1.1. Physical product
4.1.1.1.1. Online request takes longer to fulfil when compared to offline request (retail store). This happens because offline sales requires shipping
4.1.1.2. Information goods (non physical)
4.1.1.2.1. Instant access (no response time)
4.1.2. Product Variety
4.1.2.1. It is easier to provide a wider range of product in an online space because it doesn't cost as much a retail store
4.1.3. Product Availlability
4.1.3.1. Higher quality customer preference information allows the company to prepare and mitigate demands thus resulting in better product availability
4.1.4. Customer Experience
4.1.4.1. Online sales affects customer experience and the ease of service through online platforms
4.1.5. Faster time to market
4.1.5.1. By using online platforms, companies can launch their product faster than in an offline setting due to the nature of online showcase. This happens because offline sales requires the product to be delivered to the stores
4.1.6. Order visibility
4.1.6.1. The use of online platforms allows customer to monitor the availability of the product thus increasing customer visibility
4.1.7. Returnability
4.1.7.1. It is harder to return a product that is purchased through online platform, this is because the product needs to be shipped to a centralized location
4.1.8. Direct sales to customer
4.1.8.1. Online sales allows companies to sell their product directly to their customer with the use of social media. This also allows companies to get instant feedbacks.
4.1.9. Flexible pricing, product portfolio, and promotions
4.1.9.1. Online sales allows companies to change their marketing strategies effectively and in a cost efficient manner in comparison with traditional offline channel
4.1.10. Efficient fund transfer
4.1.10.1. The presence of online banking allows the companies to efficiently gather the payments, lowering the cost of revenue collection
4.2. Impact of Online Sales on Cost
4.2.1. Inventory
4.2.1.1. Online sales allows companies to lower their inventory level by using aggregate planning and postponing their production until an order is received
4.2.2. Facilities
4.2.2.1. Online sales allows companies to minimize their facilities by using a centralized facilities to centralized their operations
4.2.3. Transportation
4.2.3.1. Online sales can minimze the transportation cost of digital goods since it can be accessed digitaly
4.2.3.2. Online companies that uses aggregate inventories tend to have higher transportation cost due to the outbound shipping cost from central facilities to customer
4.2.4. Information
4.2.4.1. Information gathered from online sales can help companies to mitigate demand with the use of aggregate planning and forecasting and planning information within the supply chain. This improvement can reduce overall the supply chain cost