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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

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Distribution Structures

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  1. Distribution Structures Patrik Jonsson Logistics and Supply Chain Management Chapter 10

  2. 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

  3. 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

  4. 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?

  5. 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

  6. Figure 10.1

  7. 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

  8. Figure 10.5

  9. Figure 10.6

  10. 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-to-deliver process • p218

  11. Separate transaction and material flow channles • Two general alternatives • Direct material flow channels • Direct transaction channles • p221

  12. Figure 10.7

  13. 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

  14. 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

  15. Figure 10.8

  16. 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

  17. 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 co-ordinastion of inbound delivers • p224

  18. 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

  19. Figure 10.9

  20. 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

  21. Figure 10.10

  22. Figure 10.11

  23. 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

  24. Figure 10.13

  25. Postponement and speculation strategies • Speculation strategy: • means that value-adding or material-moving activities are carried out without any commitment from a customer • Postponement strategy: • means waiting as long as possible before performing value-adding and material-moving activities in the supply chain • p235

  26. Figure 10.15

  27. 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

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