Transcript Distribution Structures

Distribution Structures
Patrik Jonsson
Logistics and Supply Chain
Management
Chapter 10
Distribution utility values
Form utility – value refinement
 Place utility – available at the right place
 Time utility – available at teh right time
 Ownership utility – transfer to customer

Marketing/sales – ownership
 Production – form
 Distribution – place and time

p213
Division of utilities

Division of utility-performing activities
divided between functions in a company

But it can also be divided between
companies in the supply chain

p213
The distribution gaps

The division of activities in the supply
chain is one of the fundamental problems
in the planning of distribution structures
How to bridge the gaps?
 Using intermediaries?

Five gaps

Manufacturer vs. customer
Pace gap – different intervals
 Distance gap – widespread market
 Quantity gap – produce more than deliver
 Range gap – wide product range
 Variant gap – access to more variants
 p214

Figure 10.1
Gaps
Roles
Utilities
Quantity gap
Aggregation role
Place utility
Distance gap
Spreading role
Time utility
Contact role
Ownership utility
Range gap
Consolidation role
Variant gap
Creating variants role
Form utility
The intermediary roles
Aggregation role – delivers according to
needs
 Spreading role – stock-keeping, short
delivery
 Contact role – direct customer support
 Service-providing role – order-specific
configuration
 Consolidation role – represents several
companies
p215

Figure 10.5
Manufacturer
Manufacturer
Manufacturer
Manufacturer
Wholesaler
Customer
Web shop
Retailer
Customer
Customer
Retailer
Customer
Figure 10.6
Manufacturer
Manufacturer
Manufacturer
Representatives
Agent
Industrial
distributer
Customer
company
Customer
company
Customer
company
Transaction and material flow channels

Transaction flow channels


The flow of informastion around the
administration parts of order-to-deliver process
Material flow channels


Relates to the physical parts of the order-todeliver process
p218
Separate
transaction and material flow channles

Two general alternatives
Direct material flow channels
 Direct transaction channles


p221
Figure 10.7
a)
b)
Manufacturer
Manufacturer
Intermediary
Intermediary
Customer
company
Customer
company
Transaction/
Information flow
Customer
company
Customer
company
Material flow
Stock
Direct material flow channel

The intermediary may represent different
suppliers at the same time of sale and
ordering, and as such provide a type of
one-stop shopping

See figure 10.7a

p221
Direct transaction channel

Transaction channels initiary going to the
product-supplying company

While the material flow channel goes from
intermediary company to the customer
p223

See figure 10.7b

p221
Figure 10.8
a)
b)
Manufacturer
Manufacturer
Intermediary
intermediary
Customer
company
Customer
company
Customer
company
c)
Customer
company
Transaction/
Information flow
Large stock
Manufacturer
Inter-
mediary
Customer
company
Material flow
Small stock
Customer
company
Shared
transaction and material flow channels
Traditional warehousing and distribution
 Figure 10.8a

Cross-docking with sorting
 Figure 10.8b

Direct cross-docking and merge-in-transit
 Figure 10.8c

Cross-docking with sorting (10.8b)

There is no real inventory control

In principle an almost stockless flow of
materials via an intermediary

The size of the stocks depends on coordinastion of inbound delivers

p224
Direct cross-docking and
merge-in-transit

Commonly used for fast-moving consumer
goods



Large quantities are delivered daily
Broken down into smaller customer orders
Reloaded to regional delivery trucks
Several suppliers are delivering to
distribution centers where goods are
merged (figure 10.9 p227)
 p226

Figure 10.9
Manufacturer
Inter-
Customer
company
mediary
Customer
company
Material flows
in cross-docking
Manufacturer
Inter-
Customer
company
Manufacturer
mediary
Customer
company
Material flows
in merge-in-transit
Warehouse structures

High degree of centralisation:




Fewer storage points will mean that material
flowa will be grater at each place of storage
The size of stock will be smaller to maintain
the desired delivery service
The number of non-value-adding activities will
be reduced
p228-229 –figure 10.10 + 10.11
Figure 10.10
Service level
Centralised distribution structure
100 %
Decentralised distribution structure
Size of stocks
Small
Large
Figure 10.11
Costs
High
Transportation costs
Inventory
carrying costs
Storage costs
Low
Low
High
Degree of decentralisation
Changing conditions for intermediaries

During the past decade the existence and
value of intermediarieshas been quistioned

Se figure 10.13 on page 232 for examples
Figure 10.13
a)
Manufacturer
Wholesaler
Retailer
Consumer
b)
Manufacturer
Wholesaler
Retailer
Consumer
c)
Manufacturer
Wholesaler
Retailer
Consumer
Postponement and speculation strategies

Speculation strategy:


Postponement strategy:


means that value-adding or material-moving
activities are carried out without any
commitment from a customer
means waiting as long as possible before
performing value-adding and material-moving
activities in the supply chain
p235
Figure 10.15
Speculation
Delivery of finished
product from downstream distributor stock
Delivery of finished
product from manufacturer
stock or from up-stream
distributor stock
Customer specific product
made from standard
components stored at
down-stream distributor
Customer specific product
made and distributed by
manufacturer (or upstream distributor)
Manufacturing
Postpone
ment
Speculation
Postponement
Material flow
Value-adding distributors

The use of value-adding distributors has
increased significantly in many different
industries during the last decade

Not least as the consequences of market
demands for



more product variants and
more customer-specific products
p238