Supply Chain Tutorial4

NGEE ANN POLYTTEVHNIC SCHOOL OF ENGINEERING DIPLOMA IN LOGISTIC MANAGEMENT MODULE: Supply Chain Management Name: Gao yushan Student ID: S10071281 Tutorial 4 – Supply Chain Design Strategies 1. Identify the key factors to be considered when designing the distribution network. Ans: Performance of a distribution network should be evaluated along two dimensions at the highest level, one is customer needs that are met, and another one is the cost of meeting customer needs. Thus, a firm must evaluate the impact on customer service and cost as it compares different distribution network options. The customer needs that are met influence the company's revenues, which along with cost decide the profitability of the delivery network that are influenced by the structure of the distribution network. These include: 1) Response time - is the time between when a customer places an order and receives delivery. 2) Product variety - is the number of different products/configurations that a customer desires from the distribution network. 3) Product availability - is the probability of having a product in stock when a customer order arrives. 4) Customer experience - includes the ease with which the customer can place and receive their order. It also includes purely experiential aspects such as the possibility of getting a cup of coffee and the value that the sales staff provides. 5) Order visibility - is the ability of the customer to track their order from placement to delivery. 6) Returnability - is the ease with which a customer can return unsatisfactory merchandise and the ability of the network to handle such returns. 2. Discuss the strengths and weaknesses of various distribution options. Ans: Manufacturer storage with direct shipping’s advantages is it is able to centralize inventories at the manufacturer. And its weaknesses are the ownership structure of the inventories at the manufacturer. Manufacturer storage with direct shipping and in-transit merge’s advantages is lower transportation cost and improves customer experience. It’s weaknesses is additional effort during the merge itself. Distributor storage with package carrier delivery’s advantages is fast response tine and improves customer experience weaknesses is high Inventory & facilities and handling cost. Distributor storage with last mile delivery’s advantages is quick response tine and good customer experience, and its weaknesses is the cost is high. Manufacturer/distributor storage with costumer pickup’s Advantages is lower the delivery cost and its weaknesses is increased handling cost at the pickup site. Retail storage with customer pickup’s advantages is lower the delivery cost & provides a faster response than other networks, its weaknesses is increased inventory cost and facility costs. 3. Explain the role that distributors play in the supply chain. Ans: Distributors added value to a supply chain between a supply stage and a customer stage

if there are many small players at the customer stage. They reduce inbound transportation cost because of TL shipments from manufacturers to distributor. Reduce outbound transportation cost because the distributor combines products from many manufacturers into a single outbound shipment. Reduce inventory costs because distributor aggregates safety inventory rather than disaggregating at each retailer. Compared to erratic orders from each retailer, a more stable order stream from distributor to manufacturer (allows manufacturers to lower cost by planning production more effectively. By carrying inventory closer to the point of sale, distributors are also able to provide a better response time than manufacturers can. Distributors are able to offer one-stop shopping with products from several manufacturers. 4. What types of distribution networks are typically best suited for commodity items? Ans: Manufacturer/distributor storage with consumer pickup is more suitable, as transportation cost is lower than any solution using package carriers because significant aggregation is possible when delivering orders to a pickup site. 5. What type of networks is best suited to highly differentiated products? Ans: Manufacturer storage with direct shipping is the best suited for a large variety of lowdemand, high-value items where customers are willing to wait for delivery and accept several partial shipments. 6. What are some examples of very effective distribution networks? Ans: An excellent example of a hybrid network is W. W. Grainger, which combines all the aforementioned options into its distribution network. The network, however, is tailored to match the characteristics of the product or the needs of the customer. Fast-moving and emergency items are stocked locally and customers can either pick them up directly or have them shipped depending on the urgency. Slower moving items are stocked at a national DC from where they are shipped to the customer within a day or two. Very slow-moving items are typically drop-shipped from the manufacturer and involve a longer lead time. Another hybrid network is Amazon, where some items are stocked at their warehouse while other slowmoving items may be drop-shipped from distributors or publishers. 7. What differences in the retail environment may justify the fact that the fast-moving consumer goods supply chain in India has far more distributors than in the United States? Ans: The small size of Indian retail outlets limits the amount of inventory they can hold. Thus, each retailer has a small replenishment lot size. Most Indian distributors are one-stop shops stocking everything from cooking oil to soaps and detergents made by a variety of manufacturers. Besides the convenience provided by one-stop shopping, distributors are also able to reduce transportation costs for outbound delivery to the retailer by aggregating products across multiple manufacturers during the delivery runs. Distributors are able to replenish retailers with a much shorter response time than a manufacturer would be able to provide. The presence of distributors thus improves performance of the consumer goods supply chain in India by lowering transportation cost and improving replenishment response time. The major services provided by them are the ability to take in TL shipments, break bulk, store inventory, and provide outbound delivery to retailers which justify fast-moving consumer

goods supply chain in India has far more distributors than in the United States