1. Designing the Distribution Network in a Supply Chain 【本著作除另有註明外，採取創用 CC 「姓名標示 －非商業性－相同方式分享」台灣 3.0 版授權釋出】創用 CC 「姓名標示 －非商業性－相同方式分享」台灣 3.0 版 第十二單元 (3) ： Designing the Distribution Network in a Supply Chain 【本著作除另有註明外，採取創用 CC 「姓名標示 －非商業性－相同方式分享」台灣 3.0 版授權釋出】創用 CC 「姓名標示 －非商業性－相同方式分享」台灣 3.0 版 第十二單元 (3) ： Designing the Distribution Network in a Supply Chain 蔣明晃教授 1

2. Outline ►T►The Role of Distribution in the Supply Chain ►F►Factors Influencing Distribution Network Design ►D►Design Options for a Distribution Network ►T►The Value of Distributors in the Supply Chain ►D►Distribution Networks in Practice 2

3. The Role of Distribution in the Supply Chain ►D►Distribution: the steps taken to move and store a product from the supplier stage to the customer stage in a supply chain ►D►Distribution directly affects cost and the customer experience and therefore drives profitability ►C►Choice of distribution network can achieve supply chain objectives from low cost to high responsiveness ►E►Examples: Wal-Mart, Dell, Proctor & Gamble, Grainger Wikipedia 3

4. Factors Influencing Distribution Network Design ►D►Distribution network performance evaluated along two dimensions at the highest level: 》C》C ustomer needs that are met 》C》C ost of meeting customer needs ►D►Distribution network design options must therefore be compared according to their impact on customer service and the cost to provide this level of service 4

5. ►Elements of customer service influenced by network structure: 》 Response time 》 Product variety 》 Product availability 》 Customer experience 》 Order visibility 》 Returnability PZB 為 Parasuraman, Zeithaml 和 Berry （簡稱 PZB ）三位學者於 1985 年所提出 的服務品質衡量模式 ►Supply chain costs affected by network structure: 》 Inventories 》 Transportation 》 Facilities and handling 》 Information 5

6. Service and Number of Facilities Number of Facilities Response Time 6

7. Factors Influencing Distribution Network Design ►Elements of customer service influenced by network structure: 》 Response time 》 Product variety 》 Product availability 》 Customer experience 》 Order visibility 》 Returnability ►Supply chain costs affected by network structure: 》 Inventories 》 Transportation 》 Facilities and handling 》 Information 7

8. Service and Number of Facilities Number of Facilities Response Time 8

9. Inventory Costs and Number of Facilities Inventory Costs Number of facilities 9

10. Transportation Costs and Number of Facilities Transportation Costs Number of facilities 10

11. Facility Costs and Number of Facilities Facility Costs Number of facilities 11

12. Total Costs Related to Number of Facilities Total Costs Related to Number of Facilities Total Costs Number of Facilities Total Costs Inventory Transportation Facilities 12

13. Response Time Variation in Logistics Costs and Response Time with Number of Facilities Number of Facilities Total Logistics Costs 13

14. Design Options for a Distribution Network ►M►Manufacturer Storage with Direct Shipping ►M►Manufacturer Storage with Direct Shipping and In-Transit Merge ►D►Distributor Storage with Carrier Delivery ►D►Distributor Storage with Last Mile Delivery ►M►Manufacturer or Distributor Storage with Consumer Pickup ►R►Retail Storage with Consumer Pickup ►S►Selecting a Distribution Network Design 14

15. Manufacturer Storage with Direct Shipping Manufacturer Customers Product Flow Information Flow Retailer 本作品轉載自 Microsoft Office 2007 多媒體藝廊，依據 Microsoft 服務合約及著作權法第 46 、 52 、 65 條合理使用。 Microsoft 服務合約

16. Manufacturer Storage with Direct Shipping Cost FactorPerformance Inventory Lower cost because of aggregation Low demand high value; product customization can be postponed Transportation High cost due to long distance and disaggregate shipping Facilities and handling Lower facility cost; handling cost may lower if small shipment can be managed Information Significance investment in infrastructure to integrate the supplier and buyers 16

17. Manufacturer Storage with Direct Shipping Service factorPerformance Response time High response time, complicated receiving Product variety Easily provide high level variety Product availability Easily provide high level product availability Customer experience Good as home delivery but suffer as partial shipment from different suppliers Order visibility More difficult but more important Returnability Expensive and difficult to implement 17

18. In-Transit Merge Network Factories Retailer Product Flow Information Flow In-Transit Merge by Carrier Customer s 18

19. In-Transit Merge Network Cost FactorPerformance Inventory Similar to drop-shipping Transportation Lower than drop-shipping Facilities and handling Receiving cost lowers at customer; handling cost are higher drop-shipping Information Investment is higher than drop-shipping 19

20. In-Transit Merge Network Service factorPerformance Response time Similar to drop-shopping; may be higher Product variety Similar to drop-shopping Product availability Similar to drop-shopping Customer experience Better than drop-shopping because of single delivery Order visibility Similar to drop-shopping Returnability Similar to drop-shopping 20

21. Distributor Storage with Carrier Delivery Factories Customers Product Flow Information Flow Warehouse Storage by Distributor/Retailer 21

22. Distributor Storage with Carrier Delivery Cost FactorPerformance Inventory Higher than manufacturer storage. Difference is not large for faster moving items Transportation Lower than manufacturer storage. Reduction is higher for faster moving items Facilities and handling Higher than manufacturer storage. Difference is large for slow-moving items Information Simple infrastructure 22

23. Distributor Storage with Carrier Delivery Service factorPerformance Response time Faster than manufacturer storage Product variety Lower than manufacturer storage Product availability Higher cost to provide the same level of product availability as manufacturer storage Customer experience Better than manufacturer storage with drop- shipping Order visibility Easier than manufacturer storage Returnability Easier than manufacturer storage 23

24. Distributor Storage with Last Mile Delivery Factories Customers Product Flow Information Flow Distributor/Retailer Warehouse 24

25. Distributor Storage with Last Mile Delivery Cost FactorPerformance Inventory Higher than distributor storage with carrier delivery Transportation Very high cost given minimal scale economies. Higher than any other distribution option. Facilities and handling Higher than manufacturer storage or distribution with carrier delivery, but lower than a chain of retail stores. Information Similar to distributor storage with carrier delivery 25

26. Distributor Storage with Last Mile Delivery Service factorPerformance Response time Very quick. Same day to next day delivery. Product variety Easily provide high level variety Product availability Less than distributor storage with carrier delivery but larger than retail stores. Customer experience Very good, particularly for bulky items. Order visibility Easier to implement than manufacturer storage or distributor storage with carrier delivery Returnability Easier to implement than other options. Harder and more expensive than a retail network. 26

27. Manufacturer or Distributor Storage with Customer Pickup Factories Retailer Pickup Sites Product Flow Information Flow Cross Dock DC Customer Flow Customers 27

28. Manufacturer or Distributor Storage with Customer Pickup Cost FactorPerformance Inventory Can match other options depending on the location of inventory Transportation Lower than the use of package carriers, especially if using an existing delivery network Facilities and handling Facility cost will be very higher if new facilities need to be built. The increase in handling cost at the pickup site is significant. Information Significance investment in infrastructure required 28

29. Manufacturer or Distributor Storage with Customer Pickup Service factorPerformance Response time Similar to carrier delivery with manufacturer or distributor storage. Same day delivery possible for items stored locally at pickup site Product variety Similar to other manufacturer or distributor storage options Product availability Similar to other manufacturer or distributor storage options Customer experience Lower than other options. In high density area loss of convenience may be small Order visibility Difficult but essential Returnability Somewhat easier given that pickup location can handle returns 29

30. Retail Storage at Consumer Pickup Sites Cost FactorPerformance Inventory Higher than all other options Transportation Lower than all other options Facilities and handling Higher than all other options The increase in handling cost at the pickup site is significant for online and phone orders. Information Some investment in infrastructure required for online and phone orders. 30

31. Retail Storage at Consumer Pickup Sites Service factorPerformance Response time Same day pickup possible for items stored locally at pickup site Product variety Lower than all other options Product availability More expensive to provide than all other options. Customer experience Related to whether shopping is viewed as a positive or negative experience by customer. Order visibility Trivial in-store orders. Difficult, but essential, for online and phone orders. Returnability Easier than other options given that pickup location can handle returns 31

32. Comparative Performance of Delivery Network Designs 32

33. Linking Product Characteristics and Customer Preferences to Network Design 33

34. The Value of Distributors in the Supply Chain ►Distributing Consumer Goods in India: 》 Lower transportation cost and improve replenishment response time ►Distributing MRO Products: 》 Order unplanned, a few items with lower value 》 Aggregate safety inventory and consolidate outbound shipment ►Distributing Electronic Components: 》 Move components from manufacturers to small OEMs. 34

35. The Value of Distributors in the Supply Chain ►Reduce inbound cost ►Reduce outbound cost ►Reduce safety stock and inventory costs ►Stable order to manufacturers to allow effective production planning ►Provide better response time ►Offer one-stop shopping with products from several manufacturers 35

36. Distribution Networks in Practice ►The ownership structure of the distribution network can have as big as an impact as the type of distribution network ►The choice of a distribution network has very long-term consequences ►Consider whether an exclusive distribution strategy is advantageous ►Product, price, commoditization, and criticality have an impact on the type of distribution system preferred by customers 36

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