Distribution Networks

Question 1

What is distribution

Answer 1

Refers to the steps taken to move and store a product from the supplier stage to the customer stage in the supply chain

Question 2

How can performance of distribution network be identified?

Answer 2

1. Customer needs are met
2. The cost of meeting those Customer needs

Question 3

What are the factors within the distribution network that impact customer value

Answer 3

1. Responsive time
2. Product variety
3. Product availability
4. Customer experience
5. Time to market
6. Order visibility
7. Returnability

Question 4

Supply chain costs affecting changing of the distribution network?

Answer 4

1. Inventories
   - As number of facilities in supply chain increases the inventory and resulting inventory costs also increases
   - To decrease inventory costs organisation try to limit the number of facilities in their supply chain network

Question 5

Supply chain costs affecting changing of the distribution network?

Answer 5

2. Transportation cost
   - increasing the number of warehouse location decrease the cost of outbound distance to the customer

Question 6

Describe inbound and outbound transportation costs ?

Answer 6

Inbound: are incurred in bringing materials into a facility

Outbound: costs incurred for sending finished products of the facility

Outbound > inbound because inbound lot sizes are a lot larger

Question 7

Facility handling costs

Answer 7

As the number of facilities decreases the facility costs also decrease because consolidation of facilities allows a firm to exploit economies of scale (Economies of scale refer to the cost advantage a company gains by increasing production or output)

Question 8

Total logistics costs

Answer 8

As number of facilities increases the total logistics costs first decreases and eventually increases because transportation costs increases

Question 9

Manufacturer storage with direct shipping (Dropshipping)

Answer 9

Product is shipped directly to the customer from the manufacturer, by passing the retailer who takes the order and initiates the delivery request.

Question 10

Dropshipping (inventory)

Answer 10

Retailer carries no inventory
Manufacturer is the central point of inventory and keeps track of inventory levels, monitor sale trends and make accurate demand forecast

Only issue is that because the retailer places the order they are unaware how much inventory the manufacturer has and how much of the order they can fulfil

Question 11

Dropshipping(Transportation)

Answer 11

Outbound costs are higher because of deaggrigation and increased distance between the manufacturer and the customer

Dropshipping uses Package carriers which contribute to the high cost of transportation

Because some customer orders involve several manufacturers the transportation cost will increase due to multiple shipments

Question 12

Dropshipping(Facilities)

Answer 12

The facility costs are lower in dropshipping because of the centralization of inventory at the manufacturer which eliminates the need for additional warehousing within the supply chain

Question 13

Dropshipping(information)

Answer 13

Investment in a good communication infrastructure is essential in dropshipping. Because the retailer needs to provide product information to the customer from the manufacturer

The customer should also have information on the order process even when the order being placed at the retailer.

Question 14

Dropshipping( Response time)

Answer 14

Is longer because the order has to be transmitted from retailer to manufacturer and distance tends to be longer from manufacturer

It may also be longer before dropshipping orders may come from several manufacturers and the customer can receive partial shipments.

Question 15

Dropshipping (Product variaty)

Answer 15

Manufacturer storage often offers high level of product variety

Question 16

Dropshipping(Product Availability)

Answer 16

It allows the product to be available the moment the first product is produced

Question 17

Dropshipping (customer service)

Answer 17

customer service is good because of home delivery but can suffer due to partial deliveries from several manufactures

Question 18

Dropshipping (Time to market)

Answer 18

starts when the first product is produced

Question 19

Dropshipping (order visibility)

Answer 19

imprortant in the context of manufacturer storage because two stages of supply chain are involved, failure to meet this capability may lead to a negative imapact on the customer satisfaction

Question 20

Dropshipping (Returnibility)

Answer 20

In dropshipping returning an item is expensive due to some order including multiple suppliers