3HP: Distribution networks

Question 1

What is distribution?

Answer 1

Steps taken to move and store a product from the supplier stage to a customer stage in the supply chain. So basically where products are stored for upcoming deliveries/transportation

Question 2

Name some customer values

Answer 2

Product variety
Product availability
Customer experience
Time to market
Order visibility
Returnability

Question 3

What are supply chain costs?

Answer 3

• Inventories
• Transportation
• Facilities and handling
• Information

Question 4

Name the 6 different strategies for distribution network, and explain shortly

Answer 4

1. Manufacturer storage with direct shipping:
   - B2C
   - Good for high value items since inventories are centralized at manufacturer
2. Manufacturer storage with direct shipping and in-transit
   - Combo of items from different suppliers are aggregated in one single delivery
   - Positive for aggregation of inventories and lower transportation costs
3. Distributor storage with carrier delivery
   - Inventory storage at distribution centers
   - Loss of aggregation (harder to group deliveries)
   - Better customer convenience, lower transportation costs for customer
4. Distributor storage with last-mile delivery
   - The distributor/retailer delivers product to the customer home
   - Low level of aggregation–> high transportation cost
   - Convenient and better response time
5. Manufacturer/Distributor storage with customer pickup
   - order are picked up by customers at designated area
   - lower transportation cost, convenient and flexible pickup
6. Retail storage with customer pickup
   - Inventory is stored in local retail stores
   - Low outbound transportation cost
   - Good response time, but customer has to transport the item

Question 5

What is response time?

Answer 5

The time from which an order is issued until it is delivered to the customer

Question 6

How does online sales impact costs?

Answer 6

• Low inventory costs since it can be centralized
• High outbound transportation and delivery cost

Question 7

How does online sales impact the customer service?

Answer 7

• High response time
• Product variety
• Lack of relationship with customer