L4 Distribution Network design

Question 1

Key decisions in designing network configurations

Answer 1

1. How customers get their prodcuts (door-step delivery, pick up orders..)
2. Presence of intermediaries in product flow (DC?)
3. Role of warehouse/DC
4. Number of warehouses/DC

Question 2

Types of Distribution Network Configurations

Answer 2

1. Manufacturing storage with direct shipping (Drop shipping)
2. Manufacutring storage with in-transit merge
3. Distributor storage
4. Distributor storage with last-mile delivery
5. Last mile delivery with customer pickup

Question 3

Manufacturer storage with direct shipping (drop shipping)

Answer 3

Products are shipped directly from manufacturers to customers.
Suitable for high value, bulky items with irregular and low demand

Question 4

Manufacturer storage with in-transit merge

Answer 4

Retailer combines items of each order from different manufacturers so that customer receives single delivery.
Usually for items that must be shipped in a single shipment (e.g. PC)

Question 5

Distributor storage

Answer 5

Inventory is held in a Facility to serve customers in a region.
Well suited for medium and fast moving items.
Able to achieve faster deliveries.

Question 6

Distributor storage with Last mile delivery

Answer 6

Suited for following conditions:

• Areas with high population density
• Products require short response time
• Cusotmers willing to pay for convenience and /or fast deliveries

Question 7

Last mile delivery with customer pickup

Answer 7

Customers travel to designated pick-up points to collect their merchandise.
Reduced societal impact (road congestion, carbon emission…)

Question 8

Omni channel retail

Answer 8

Traditional brick and mortar moving online and online retailers setting up physical stores