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Chapter 4Designing the Distribution Network in a Supply Chain Outline The Role of Distribution in the Supply Chain Factors Influencing Distribution Network Design Design Options for a Distribution Network E-Business and the Distribution Network Distribution Networks in Practice Summary of Learning Objectives The Role of Distributionin the Supply Chain Distribution: the steps taken to move and store a product from the supplier stage to the customer stage in a supply chain Distribution directly affects cost and the customer experience and therefore drives profitability Choice of distribution network can achieve supply chain objectives from low cost to high responsiveness Examples: Wal-Mart, Dell, Proctor Gamble, Grainger Factors InfluencingDistribution Network Design Distribution network performance evaluated along two dimensions at the highest level: Customer needs that are met Cost of meeting customer needs Distribution network design options must therefore be compared according to their impact on customer service and the cost to provide this level of service Factors InfluencingDistribution Network Design Elements of customer service influenced by network structure: Response time Product variety Product availability Customer experience Order visibility Returnability Supply chain costs affected by network structure: Inventories Transportation Facilities and handling Information Service and Number of Facilities (Fig. 4.1) The Cost-Response Time Frontier Inventory Costs and Numberof Facilities (Fig. 4.2) Transportation Costs andNumber of Facilities (Fig. 4.3) Facility Costs and Numberof Facilities (Fig. 4.4) Design Options for a Distribution Network Manufacturer Storage with Direct Shipping Manufacturer Storage with Direct Shipping and In-Transit Merge Distributor Storage with Carrier Delivery Distributor Storage with Last Mile Delivery Manufacturer or Distributor Storage with Consumer Pickup Retail Storage with Consumer Pickup Selecting a Distribution Netwo
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