A1 Onstein Factors Determining Distribution Structure Decisions Flashcards
What is a distribution structure in logistics?
It is the spatial layout of freight transport and storage systems used to move goods from production to consumption locations.
What is the main trade-off in distribution structure decisions?
The balance between service level (faster deliveries, higher availability) and logistics costs (transport, inventory, and warehousing expenses).
What are the three research streams that study distribution structure decisions?
Supply Chain Management (SCM) – Focuses on cost and service trade-offs.
Transportation – Studies freight flow predictions and distribution networks.
Geography – Examines spatial patterns and location factors for distribution centers.
What are the seven key factors influencing distribution structure decisions?
Demand Level – Volume and volatility of demand.
Service Level – Lead time, flexibility, delivery frequency.
Product Characteristics – Value density, inventory policy.
Logistics Costs – Transport, inventory, warehousing costs.
Labour & Land Availability – Cost and expansion capability.
Accessibility – Distance to transport networks, congestion.
Contextual Factors – Regulations, taxes, incentives.
What are the two main types of distribution structures?
Centralised Distribution – Few, large warehouses serving broad regions.
Decentralised Distribution – Many smaller distribution centers closer to customers.
Example: IKEA uses centralised distribution in the Netherlands, while Amazon relies on a decentralised model with local fulfillment centers.
How do logistics costs affect distribution structure decisions?
High transport costs → Favors decentralised distribution (shorter transport distances).
High inventory costs → Favors centralised distribution (fewer storage locations).
How does product type influence distribution structure selection?
Fast-moving, low-value goods → Decentralised for quick delivery.
High-value, low-demand goods → Centralised to reduce inventory costs.
What role do accessibility factors play in distribution structure decisions?
Proximity to highways, ports, railways, and airports affects transport efficiency.
Congestion and traffic can make certain locations less attractive.
How do labour and land costs impact distribution center locations?
Urban areas: Higher wages & land costs but closer to customers.
Rural areas: Lower costs but may lack skilled labor and infrastructure.
What are contextual factors that affect distribution structures?
Zoning laws and regulations
Tax incentives and subsidies
International trade conditions
Customs and import/export policies
What is logistics sprawl, and why is it a concern?
Logistics sprawl is the trend of distribution centers moving away from urban cores to suburban or rural areas.
Pros: Lower costs, more space for expansion.
Cons: Increased transport distances, higher emissions, congestion issues.
