SUPPLY CHAIN
MANAGEMENT
Dr. Le Thi Diem Chau
Dept. of Industrial and Systems Engineering
Email: [email protected]
SUPPLY CHAIN MANAGEMENT 7
Contents
• Building a Strategic Framework to Analyze
Supply Chains
• Designing the Supply Chain Network
• Planning and Coordinating Demand and
Supply chain in a Supply Chain
• Planning and Managing Inventories in a
Supply Chain
• Designing and Planning Transportation
Networks
• Managing Cross-Functional Drivers in a
Supply Chain
• Information Technology in a Supply Chain
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SUPPLY CHAIN MANAGEMENT 7
❑ Designing distribution networks and
applications to OMNI-Channel retailing
Introduction ❑ Network designing in the supply chain
Part II. Designing The Supply Chain
Network ❑ Designing global supply chain
networks
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TOPIC 4.
DESIGNING DISTRIBUTION
NETWORKS AND APPLICATIONS
TO OMNI-CHANNEL RETAILING
Dr. Le Thi Diem Chau
Dept. of Industrial and Systems Engineering
Email: [email protected]
Section
• Factors Affecting Distribution Network Design in the Supply Chain
1
• Design Options for a Distribution Network
2
• Online Sales and Omni-Channel Retailing
3
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SECTION 1
Factors Affecting Distribution Network Design in the
Supply Chain 6
Distribution in • Refers to the steps taken to move
The Supply and store a product from the supplier
stage to a customer stage in the
Chain supply chain.
• Occurs between every pair of stages
in the supply chain.
• Is a key driver of the overall
profitability of a firm
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Process of designing a
distribution network
Phase 1 Phase 2
The broad structure of the supply Takes the broad structure and
chain network is visualized converts it into specific
▪ locations and their capability,
Decides the number of stages in
the supply chain and the role of ▪ capacity,
each stage ▪ and demand allocation
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Key factors influence the performance
of a distribution network
❑ Value provided to the ❑ Cost of meeting customer
customer needs
• Response time • Inventory
• Product variety • Transportation
• Product availability • Facilities
• Customer experience • Information
• Time to market
• Order visibility
• Returnability
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Value provided to the customer
▪ Response time:
o is the amount of time it
takes for a customer to
receive an order
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Value provided to the customer
Product variety Product availability Customer experience
• is the number of different • is the probability of • Includes the ease with
products or fulfilling a customer order which customers can
configurations that are from inventory place and receive orders
offered by the distribution and the extent to which
network this experience is
customized.
• Also includes purely
experiential aspects,
such as the possibility of
getting a cup of coffee
and the value that the
sales staff provides
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Value provided to the customer
Time to market Order visibility Returnability
• Is the time it takes to • Is the ability of customers • Is the ease with which a
bring a new product to to track their orders from customer can return
the market placement to delivery unsatisfactory
merchandise and the
ability of the network to
handle such returns
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Cost of meeting customer needs
▪ Inventories:
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Cost of meeting customer needs
▪ Transportation:
o Inbound transportation costs
are the costs incurred to
bring material into a facility.
o Outbound transportation
costs are the costs of
sending material out of a
facility.
o Outbound transportation
costs per unit tend to be
higher than inbound costs
because inbound lot sizes
are typically larger.
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Cost of meeting customer needs
▪ Facilities:
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Cost of meeting customer needs
▪ Total logistics cost:
o Are the sum of inventory,
transportation, and facility
costs for a supply chain
network.
o As the number of facilities
increases, total logistics
costs first decrease and
then increase.
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Two key decisions
when designing a
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distribution network
1. Will product be delivered to the
customer location or picked up
from a prearranged site?
2. Will product flow through an
intermediary (or intermediate
location)?
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Six distinct distribution network designs
1. Manufacturer storage with direct shipping
2. Manufacturer storage with direct shipping and in-transit merge
3. Distributor storage with carrier delivery
4. Distributor storage with last-mile delivery
5. Manufacturer/distributor storage with customer pickup
6. Retail storage with customer pickup
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Manufacturer Storage with Direct
Shipping
• Is referred to as drop-shipping
• In most cases, drop-shipping is used
to deliver slow moving items to
customers
• EX: eBags, Nordstrom.com, and
W.W. Grainger
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Performance Characteristics of Manufacturer
Storage with Direct Shipping Network
20XX SAMPLE FOOTER TEXT 21
Manufacturer Storage with Direct Shipping
and In-Transit Merge
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Performance Characteristics of Manufacturer
Storage with Direct Shipping and In-Transit Merge
SAMPLE FOOTER TEXT 23
Distributor Storage with Carrier Delivery
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Performance Characteristics of Distributor Storage
with Carrier Delivery
SAMPLE FOOTER TEXT 25
Distributor Storage with Last-Mile Delivery
• Last-mile delivery refers to the distributor/retailer delivering the product to
the customer’s home instead of using a package carrier
SAMPLE FOOTER TEXT 26
Performance Characteristics of Distributor
Storage with Last-Mile Delivery
SAMPLE FOOTER TEXT 27
Manufacturer or Distributor storage with
Customer pickup
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Performance Characteristics of Network with
Consumer Pickup Sites
SAMPLE FOOTER TEXT 29
Retail Storage with Customer Pickup
• Viewed as the most traditional type of supply chain, inventory is stored
locally at retail stores.
• Customers walk into the retail store or place an order online or by phone
and pick it up at the retail store.
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Performance Characteristics of Retail
Storage with Customer Pickup
SAMPLE FOOTER TEXT 31
Selecting a Distribution network Design
SAMPLE FOOTER TEXT 32
Selecting a Distribution network Design
SAMPLE FOOTER TEXT 33
Online Sales and
Omni-Channel
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Retailing
• Omni-channel retailing refers to the
use of multiple channels to interact
with customers and fulfill their orders
• The interaction between a customer
and a retailer relates to 3 information:
− Information: exchanged face-to-face as in a
retail store or remotely as when a customer
shops online.
− Product exchange: may occur through a
customer pickup or home delivery
− Funds: exchanged through the same
channel where information is exchanged
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20XX SAMPLE FOOTER TEXT 35
The Alternatives in Omni-Channel Retail
• Alternative channels:
1.Traditional retail
2.Showroom
3.Online information + Home delivery
4.Online information + Pickup
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Performance of Channels in Terms of
Customer Service Cost
• Response time to customers • Inventory
• Product variety • Facilities
• Product availability • Transportation
• Customer experience • Information
• Faster time to market
• Order visibility
• Returnability
• Direct sales to customers
• Efficient funds transfer
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THANK YOU
Dr. Le Thi Diem Chau
SUPPLY CHAIN MANAGEMENT
[email protected]
https://orcid.org/my-orcid?orcid=0000-
0003-4045-0981
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