Distribution Structures Patrik Jonsson Logistics and Supply Chain Management Chapter 10

Distribution utility values  Form utility – value refinement  Place utility – available at the right place  Time utility – available at teh right time  Ownership utility – transfer to customer  Marketing/sales – ownership  Production – form  Distribution – place and time p213

Division of utilities  Division of utility-performing activities divided between functions in a company  But it can also be divided between companies in the supply chain  p213

The distribution gaps  The division of activities in the supply chain is one of the fundamental problems in the planning of distribution structures  How to bridge the gaps?  Using intermediaries?

Five gaps  Manufacturer vs. customer  Pace gap – different intervals  Distance gap – widespread market  Quantity gap – produce more than deliver  Range gap – wide product range  Variant gap – access to more variants  p214

Figure 10.1

The intermediary roles  Aggregation role – delivers according to needs  Spreading role – stock-keeping, short delivery  Contact role – direct customer support  Service-providing role – order-specific configuration  Consolidation role – represents several companies p215

Figure 10.5

Figure 10.6

Transaction and material flow channels  Transaction flow channels The flow of informastion around the administration parts of order-to-deliver process  Material flow channels Relates to the physical parts of the order-to- deliver process p218

Separate transaction and material flow channles  Two general alternatives  Direct material flow channels  Direct transaction channles  p221

Figure 10.7

Direct material flow channel  The intermediary may represent different suppliers at the same time of sale and ordering, and as such provide a type of one-stop shopping  See figure 10.7a  p221

Direct transaction channel  Transaction channels initiary going to the product-supplying company  While the material flow channel goes from intermediary company to the customer p223  See figure 10.7b  p221

Figure 10.8

Shared transaction and material flow channels  Traditional warehousing and distribution  Figure 10.8a  Cross-docking with sorting  Figure 10.8b  Direct cross-docking and merge-in-transit  Figure 10.8c

Cross-docking with sorting (10.8b)  There is no real inventory control  In principle an almost stockless flow of materials via an intermediary  The size of the stocks depends on co- ordinastion of inbound delivers  p224

Direct cross-docking and merge-in-transit  Commonly used for fast-moving consumer goods Large quantities are delivered daily Broken down into smaller customer orders Reloaded to regional delivery trucks  Several suppliers are delivering to distribution centers where goods are merged (figure 10.9 p227)  p226

Figure 10.9

Warehouse structures  High degree of centralisation: Fewer storage points will mean that material flowa will be grater at each place of storage The size of stock will be smaller to maintain the desired delivery service The number of non-value-adding activities will be reduced  p –figure

Figure 10.10

Figure 10.11

Changing conditions for intermediaries  During the past decade the existence and value of intermediarieshas been quistioned  Se figure on page 232 for examples

Figure 10.13

Postponement and speculation strategies  Speculation strategy: means that value-adding or material-moving activities are carried out without any commitment from a customer  Postponement strategy: means waiting as long as possible before performing value-adding and material-moving activities in the supply chain  p235

Figure 10.15

Value-adding distributors  The use of value-adding distributors has increased significantly in many different industries during the last decade  Not least as the consequences of market demands for more product variants and more customer-specific products  p238