lesson 7 downstream supply chain
TRANSCRIPT
Downstream supply chain managementDownstream supply chain management
What is downstream supply chain management?What is downstream supply chain management?
Downstream supply chain management covers the desicions involved in the supply chain´s tiers from
the focal company down to the customers
Distribution strategy covers choise of forms of distribution and transport, number and location of warehouses and whether the company carries out activities itself or buys (oursources) them.
So….So….
How many warehouses?Where to put them?How many tiers before reaching the customer?Choise of transport carrier?
Remember – distributionsstrategy must reflect the customers need of delivery service
DistributionsformsDistributionsforms
Direct distribution Indirect distribution; ◦ De-central or central warehouses
Distribution centre
Advantages and disadvantages of direct and indirect Advantages and disadvantages of direct and indirect distributiondistribution
Direct distribution Indirect distribution
Advantages Disadvantages Advantages Disadvantages
Control Narrow product range
Cheap Lack of control
Closeness to cusomers gives:Knowledge about needsKnowledge about new wishesBranding
Expensive Specialised detailedReach more customersAssociated with others branding
Poor knowledge of customer needs
Direct distributionDirect distribution
Is equal to high logistic efficiency – are often seen by:
• Order production i.e. windmills• Big lots• other?
Indirect distributionIndirect distribution
- Is equal to establishment of stocks in between the focal company and the end customer
The more tiers = longer distribution time
A stock can be either de-central or central
De-central warehousesDe-central warehouses
De-central warehouses means warehouses placed near the markets and hence the customers
Why?Short delivery time If market preferences are different
Why not?Risk of binding to much capitalControl of the stocks can be suboptimized
Central warehousesCentral warehouses
Central warehouses means that one stock covers more countries or markets. Why?
Better control and use of capacityReduction of administrative costHigher delivery flexibilityLower cost due to risk poolingseffectBetter coordinated transport
Why not?Need of short delivery time
RiskpoolingseffektenRiskpoolingseffekten
means that variation in demand that can end with back orders of obsolete goods on decentral warehouses can be reduced by centralising because the demand is aggregated across different markets
Central warehouseCentral warehouse
Distribution centerDistribution center
The purpose of distributionscenters is to collect, store and reload goods from different companies
To tasks like:
◦ In coming goods◦ Stocking◦ Picking◦ Shipping
Examples are: Coop, Dansk Super Marked
Location of warehousesLocation of warehouses
De-central warehouse:◦ Customer location most important
Central warehouse:◦ Infrastructure to and from the warehouse is important
Transport choiseTransport choise
1. Internal transport◦ Moving of raw material and semi finished goods
1. Eksternal transport◦ Moving of finished goods and semi finished goods to
customers or distributionscenters
Types of transportationTypes of transportation
Influence delivery time and flexibility. But is influenced by:
Product characteristicsCompetitive parameters InfrastructureType of transportation
Outsourcing distribution management
Differentiated distribution management
Significance for logistic efficiency
Task – Adidas direct businessTask – Adidas direct businesswww.youtube.com/watch?
v=o_VnQJaQ5kw