Transcript
distribution networks design
Presented by: Shaghayegh Parhizi Zeinab Bagherpour
Distribution (5) Distribution (5) Distribution definition : Distribution means , making product available in the markets. In the other words , distribution means to reach the appropriate product to the appropriate place , in the appropriate time. The two general aspects of product availability :
Preparing product for sailing to the end customer
Making product available via taking possession of it by the end customer
Distribution (5) Distribution (5)
Distribution channel definition : It is a way that product and its ownership rights flow through it. Distribution Distribution channels channels are mostly mostly chains of different different organizations that except the main distributor and the end customer are nominated “wholesalers “ wholesalers”. ”.
Activities in a distribution channel :
1.
Activities are related to changing ownership
2.
Activities are related to physical supply of product
3.
Lateral activities
Distribution (5) Distribution (5) phys ph ysic ical al di dist stri ribu buti tion on : formal management of physical distribution is analyzing , programming and controlling a level of product availability that is proportional with demands of the market area and resources of the firm. The important points in distribution decisions : 1.Product inventory 2. Facilities 3. Relationships 4. Transportati Transportation on 5. The size of unit load
Distribution ( 5) 5)
The difference between physical distribution & transportation
Factors influencing distribution network design
(3)
Response time Product variety Product availability Customer experience Order visibility Return ability
Literature review (4)
Literature review
Tow key dicisions
Will product be delivered to the customer location or picked up from a preordained site ?
Will product flow through an intermediary?
Design options for a distribution networ (3)
Manufacturer storage with direct shipping
Manufacturer storage with direct shipping and in-transit merge
Distributor storage with package carrier delivery
Distributor storage with last mile delivery
Manufacturer/ Distributor storage with customer pick up
Retail storage with customer pick up
Manufacturer storage with direct shipping (3) manufacturer
retailer
customers
Product flow Information flow
Performance characteristics of Manufacturer storage with direct shipping (3) shipping (3) Cost factor
Performance
Inventory
Lower cost because of aggregation . Benefits of aggregation are highest for low-demand , high value items. Benefits are very large if product customization can be postpone at the manufacturer
Transportation
higher higher transpo transporta rtatio tion n cost cost becaus because e of increased distance and disaggregate shipping
Performance characteristics of Manufacturer storage with direct shipping (3) Cost factor Performance Facilities & handling
Lower facility cost because of aggregation . Some saving on handling costs if manufacturer can manage small shipments or ship from production line
Information
Significant investment in information infrastructure to integrate manufacturer & retailer
Performance characteristics of Manufacturer storage with direct shipping (3) Service factor Performance Response time
High re High resp spons onse e ti time me of between 1 to 2 weeks because of increased of increased distance and two stages for order processing. order processing.
Response time may vary by product , thus complicating receiving .
Product variety
Easy to provide a very high level of variety
Performance characteristics of Manufacturer storage with direct shipping (3) shipping (3) Service factor
Performance
Product availability
Easy to provide a high level of Product availability because of aggregation at manufacturer .
Customer experience
Good in terms of home delivery but can suffer if order from several manufacturers is sent as partial shipments
Performance characteristics of Manufacturer storage with direct shipping (3) Service factor Performance Order visibility
More difficult but also more important from a customer service perspective
Returnability
Expensive & difficult to implement
Manufacturer storage with direct shipping and in-transit merge (3) merge (3)
Factories
Retailer
In – Transit Transit merge merge by by carrier carrier
Customer
Product flow Information flow
Performance characteristics of in-transit merge (3) merge (3) Cost factor
Performance
Inventory
Transportation
Somewhat lower transportation cost than drop-shipping
Facilities & handling
Handling cost higher than dropshipping at carrier
Similar to drop-shipping
Receiving cost lower at customer
Information
Investment is somewhat higher than for drop-shipping
Performance characteristics of in-transit merge (3) Service factor
Performance
Response time
Similar to drop-shipping may be marginally higher
Product variety
Similar to drop-shipping
Product availability
Similar to drop-shipping
Performance characteristics of in-transit merge (3) merge (3) Service factor Performance Customer experience
Better than drop-shipping because a single delivery has to be received.
Order visibility
Returnability
Similar to drop-shipping
Similar to drop-shipping
Distributor storage with package carrier delivery (3)
Factories
Warehouse storage by distribution / retailer
Customer
Product flow Information flow
Performance characteristics of Distributor storage with package carrier delivery (3) delivery (3) Cost factor
Performance
Inventory
Higher than manufacturer storage . Difference is not large for faster moving items
Transportation
Facilities & handling
Somewhat higher than manufacturer storage . The difference can be large for slow slow-- movi moving ng item items s.
Information
Lower than manufacturer storage . Reduction is higher for faster moving
Simpler infrastructure compare to manufacturer storage .
Performance characteristics characteristics of Distributor storage with package carrier delivery (3) delivery (3) Service factor Performance Response time
Faster than manufacturer storage
Product variety
Product availability
Lower than manufacturer storage
Higher cost to provide the seem level of availability as manufacturer storage
Performance characteristics characteristics of Distributor storage with package carrier delivery (3) delivery (3) Service factor Performance Customer experience
Better than manufacturer storage with drop-shipping.
Order visibility
Easier than manufacturer storage .
Returnability
Easier than manufacturer storage .
Distributor storage with last mile delivery (3) delivery (3) Factories
distribution / retailer warehouse
Product flow Information flow
Customer
Distributor storage with last mile delivery (3) Cost factor
Performance
Inventory
Higher than distributor with package carrier delivery.
Transportation
Very high cost given minimal scale economies . Higher than any other distribution option .
Facilities & handling
Information
Similar to distributor with package carrier delivery
Facility costs higher than manufacturer storage or distribution storage with package carrier delivery , but lower than a chain of retail stores .
Distributor storage with last mile delivery (3) Service factor Performance Response time
Very quick. Same day to next day delivery
Product variety
Product availability
More expensive to provide availability than any other option except retail stores
Somewhat less than distributor storage with package carrier delivery but larger than retail stores
Distributor storage with last mile delivery (3) Service factor Performance Customer experience
Very good particularly for bulky items
Order traceability
Less of and issue and easier to implement than manufacturer storage or distributor storage with package carrier delivery
Returnability
Easier to implement than other options. Harder and more expensive than a retail network
Manufacturer/ Distributor storage with customer pick up (3) up (3)
Factories Cross Dock DC
Retailer
Pick up site
Customer
Customer flow
Product flow
Information flow
Manufacturer/ Distributor storage with customer pick up (3) up (3) Cost factor
Performance
Inventory
Transportation
Facilities & handling
Can match any other option depending on the location of inventory Lower than the use of package carrier , specially if using delivery network Facility costs can be very high if a new facilities have to built Costs are lower if existing facilities are used
The increase in handling cost at the pick up site can be significant
Information
significant investment infrastructure required
Manufacturer/ Distributor storage with customer pick up (3) up (3) Service factor Performance Response time
Similar to package carrier delivery with manufacturer or distributor storage. Same day delivery possible for items stored locally at pick up site
Product variety
Product availability
Similar to other manufacturer or distributor storage options Similar to other manufacturer or distributor storage options
Manufacturer/ Distributor storage with customer pick up (3) up (3) Service factor Performance Customer experience
Lower than other options because of the lack of home delivery
In areas with high density of population loss of convenience may be small
Order visibility
Difficult but essential
Returnability
Somewhat easier given that pick up location can handle returns .
Retail storage with customer pick up (3) up (3) Cost factor
Performance
Inventory
Transportation
Facilities & handling
Information
Higher than all other options Lower than all other options Higher than all other options
The increase in handling cost at the pick up site can be significant for online and phone orders
some investment in infrastructure required for online and phone orders
Retail storage with customer pick up (3) Service factor Performance Response time
Very quick. Same day pick up possible for items stored locally at pick up site
Product variety
Product availability
More expensive to provide than all other options
Lower than all other options
Retail storage with customer pick up (3) Service factor Performance Customer experience
Related to whether shopping is viewed positive or negative experience by Customer
Order traceability
Returnability
Easier than other options given that pick up location can handle returns
Trivial for in-store orders difficult , but essential , for online and phone orders
Selecting a distribution network design (3) design (3) Retailer storage (customer pick up)
Man.. Storage (direct shipping)
Man Storage ( in – transit merge )
Dis.. Storage (package carrier
Dis.. Storage (last mile delivery)
Man.. Storage (pick up)
Delivery)
Res Time
1
4
4
3
2
4
Pro var
4
1
1
2
3
1
Pro avail
4
1
1
2
3
1
Cust exp
5
4
3
2
1
5
Ord visi
1
5
4
3
2
6
Return
1
5
5
4
3
2
Invent
4
1
1
2
3
1
Transpo
1
4
3
2
5
1
Faci&ha
6
1
2
3
4
5
info
1
4
4
3
2
5
CASE 1: A dynamic distribution model for combat logistics (2) logistics (2)
Traditional combat service support.
CASE 1: A dynamic distribution model for combat logistics (2) logistics (2)
Combat service support for OMFTS.
Problem definition (2) definition (2) Indices & Sets : i; j : nodes or locations (i = 0 is the sea base)
k : commodities t : time periods I : set of all nodes Is : set of supply nodes Ic : set of combat nodes Isl : set of land-based supply nodes Icl :set of land-based combat nodes Il : set of land-based nodes Ib : set of beach nodes accessible by watercraft Ii : set of inland (not beach) nodes K : set of commodities T : set of time periods
Problem definition (2) definition (2) Data ws : weight of a support unit wc : weight of a combat unit sij : distance from node i to node j bit maximum total inventory that can be held at node i in period t D jkt : demand for commodity k at node j in period t N : maximum number of support units La : available air lift in a period (in lb mile) Ls : available ship-shore lift in a period (in lb mile) Tijt : indicates movement of a combat unit from i to j in period t M : a large number
Problem definition (2) definition (2) Decision variables :
Xijt : equals 1 if a unit moves from node i to node j in period t, and 0 otherwise Iikt : inventory of commodity k held at node i in period t Yijkt : quantity of commodity k shipped from node i to j in period t
Problem formulation (2) formulation (2) Min
∑ ∑ ∑ I ikt
∑ ∑ ∑
+ ws
i ∈ I 1 k ∈ K t ∈ T
i ∈ IS
I ijk + ∑Y JIKT − ∑Y ijkt − Dikt = I ik ,t +1 j∈ I
j ∈ I s 1 t ∈ T
∀i ∈ I c1, k ,t
j∈ I
I ijk + ∑Y JIKT − ∑Y ijkt = I ik ,t +1 j∈ Is
1
X ijt
j∈ I
∀i ∈ I s1, k , t
Problem formulation (2) formulation (2)
∑ X jit −∑ X ij t
, +1
j∈ I s
=0
∀i∈ I s1,t ,
j∈ I s
∑ Y ijkt − M ( X iit + X ijt ) ≤
0
∀i ∈ I s, j ∈ I s,t ,
k ∈K
∑∑Y ijkt − MX iit ≤ 0 j∈ I c k ∈K
∀i ∈ I s1,t ,
Problem formulation (2) formulation (2) ∑ I ikt − M ∑ X ijt ≤ 0 k ∈ K
∀ i ∈ I s1 , t ,
j ∈ I s 1
∑ Y ijk t
, +1
− I ikt ≤ 0
∀ i ∈ I s1, k , t
j ∈ I 1
∑ ∑ Y ojkt S o j + W c ∑ ∑ T ijt Sij j ∈ I i k ∈ K
j ∈ I 1 i∈ I 1
≤ La
∀t ,
Problem formulation (2) formulation (2) ∑ ∑Y ojk Soj + W C T oj Soj + ∑ ∑Y ojk Soj + W c ∑T i j So j 1
1
j∈ I b k ∈K
∑ I ikt
1
j∈ I 1 k ∈K
− b it ≤ 0
1
≤ L A + Ls
i∈ I 1
∀ i ∈ I c 1 ,
k ∈ K
Y i jkt , I ikt ≥ 0
∀ i , j , k , t
CASE 2:Designing logistics networks in divergent process industries: methodology and its application to the lumber industry (1) industry (1)
The proposed approach involves five steps: 1. The definition of the product-markets, sourcing context and planning horizon. 2. The definition of product families and the elaboration of the manufacturing-storage activities process graph. 3. The definition of potential network resources (facilities location, layouts, technologies and capacity options) and of technology dependent recipes for production activities. 4. The definition of the revenues and costs associated to the network design and activity decisions. 5. The optimal mapping of the process graph onto the potential network resources.
CASE 2:Designing logistics networks in divergent process industries: methodology and its application to the lumber industry (1) industry (1)
markets : the spot market large retailers industrial customers Source: Producers have little control over their supply of raw material.
CASE 2:Designing logistics networks in divergent process industries: methodology and its application to the lumber industry (1) industry (1)
CASE 2:Designing logistics networks in divergent process industries: methodology and its application to the lumber industry (1) industry (1)
Model
Modeling the supply market
Modeling production-distribution facility layouts and capacity options
Modeling flows and inventories
Objective function
CASE 2:Designing logistics networks in divergent process industries: methodology and its application to the lumber industry (1) industry (1) MAXIMIZATION
∑ eO o∈O
+
o
−
[(1 − Zo ) M o − M o ]
subject to Supply market constraints (1). Facility layout, space and exclusive options constraints (5), (6) and (7). Seasonal capacity option usage constraints (8). Production activities flow equilibrium constraints (9) and (10). Storage activities inventory accounting constraints (11) and (12). Production and storage capacity constraints (14), (15) and (16). Sales market constraints (17) and (18). Facilities total cost and revenue definitions (19),(20) and (21).
CASE 2:Designing logistics networks in divergent process industries: methodology and its application to the lumber industry (1) industry (1)
References 1.Designing logistics networks in divergent process industries:A methodology and its application to the lumber industry; Didier Vila, Alain Martel, Robert Beauregarda;(Int. J. Production Economics 102 (2006) 358–378) 2.A dynamic dynamic distribution distribution model model for combat logistics, logistics,Kevin Kevin R. Gue,Compu Gue,Computers ters & Operations Operations Research Research 30 (2003) (2003) 367–381
3.Supply chain management,Stratrgy, Planning,O Planning,Operati peration;SUN on;SUNIL IL CHOPRA, CHOPRA, PETER PETER MEINDL MEINDL (
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ﺧﯼﻮ اﺧﯼﻮ اﺣﻤﺪ ، ( ﻤﯽﻠ ﻠﯽﻤ و ﻋﻤﯽﻠ ﻋﻠﯽﻤ ) ﺗﻮزﻳﻊ ﻣﺪﻳﺮﻳﺖ.5
