Week 5: Distribution Strategies Flashcards
Name the seven steps of logistics as enabler?
- Application of cross-docking
- Reduces costs
- This leads to reduced prices for customers
- This reduces the number and scope of promotions
- This increases the predictability of sales
- This reduces stock-out and inventory costs
- This further decreases costs, while increasing sales
This is a positive feedback loop
Name the three different types of distribution channels
- Direct shipping
- Warehousing
- Cross-docking
What is direct shipping?
no warehouse or cross-dock center.
- Manufacturer ships straight to retail stores
Name four situations in which items should be shipped directly
- Difficult-to-handle products
- Non-assortment products (make-to-order products)
- Truckload volume per retail store (customer)
- Products with very short shelf life (perishable)]
What is warehousing?
- Manufacturer ships to a retailer’s warehouse, from there to the store
What cost considerations for 1 central facility should be made?
- Inventory levels and safety stock are reduced
- Blue + white collar worker costs go down
Economies of scale (automation) - Transportation costs (inbound + outbound) goes down and up
- Facility costs (energy + maintenance) goes down
What is cross-docking?
Distribution center receives, sorts and ships products to retailers
- Moving products directly from inbound vehicle to outbound vehicle, without decoupled storage in between
- You exactly order the products for which destination is already known
What four steps does cross-docking consist of?
- DC receives different truckloads from different manufacturers
- Items are placed on a conveyer belt that scans the items and sorts all products
- Products going to a particular store are gathered at the outbound dock
- Trucks with all the items from different manufacturers going to the same store are loaded up and transport all goods to that one store
Name the two types of cross-docking?
- Unit load cross-docking
- Parcel cross-docking
What is one-toch cross docking?
products are moved in a single motion from receiving to shipping with minimal handling. No storage or staging.
This is a form of unit load cross-docking
What is single stage cross-docking?
inbound goods are received, sorted and directly transferred to outbound transportation. Might be short staging period to ensure proper sorting and consolidation
This is a form of unit load cross-docking
What is two-stage cross docking?
inbound goods are temporarily staged or stored before being sorted and consolidated for outbound shipping. Used when additional processing ins required.
This is a form of unit load cross-docking
What is parcel cross-docking?
incoming shipments from multiple sources are quickly sorted and consolidated for immediate outbound shipping without long-term storage. Often using a conveyer belt and for parcel distribution networks
Name the two types of cross-docking operations?
- Pre-sorted operations: Suppliers prepare the shipment (packing, barcoding, labelling, etc) for your customers
- Pick-to-zero (PtZ) operations: Order picking for customers carried out at the cross-dock facility
Name four characteristics of cross-docking?
- Reduction of inventory levels Costs similar to direct
- Carrying cost/ capital invested goes down
- Obsolescence cost (risk) goes down
- Loss and damage costs go down
When should you cross-dock?
- Predictable, high-demand and high cubic volume
- Total lead time is critical
- In case of high holding cost
Name the three requirements for a successful cross-docking system?
- Advanced information systems available throughout supply chain
- Information must be shared
- Fast and responsive transportation system:
1. Sufficient vehicles
2. Fully loaded trucks
Name the six elements of lateral shipments?
- Shipment of items between different facilities at the same level in the supply chain to meet an immediate need
- Customer demand is met from another retailer
- Retailers must know what other retailers have in inventory
- Information system is needed - Takes advantage of risk pooling since all inventories are available
- Doesn’t work well if retailers are independently owned
- Retail practice: pooling is done via a central warehouse
Name two managerial insights from distribution strategies?
- Inventory advantage of cross docking and direct distribution over warehousing
- Consolidating retail locations reduces inventory levels at distribution center
- Relative benefit of adding extra retail location is decreasing - Transport cost advantage of warehousing over direct and cross-docking
