Design Options for

E-Distribution Network

Types of Network Design for online sales

 Storage at Manufacturer, and Direct
Shipping
 Merge In-Transit Network
 Storage at Distributor and Carrier Delivery
 Storage at Distributor and Last Mile
Delivery
 Storage at Manufacturer or Distributor with
Customer Pickup
 Retail storage with customer pickup
 Retail Storage with Customer Pickup
(Traditional Supply Chain)
Response Time
Factories
Product Variety

Product Availability

Customer
Experience Customer Flow
Order Visibility Product Flow
Warehouse
Returnability Information Flow
Inventory

Transportation Retail

Facility & Handling

Information
Customers

Storage at Manufacturer, and Direct Shipping

Response Time

Product Variety Manufacturer

Product Availability

Customer
Experience Retailer
Order Visibility

Returnability

Inventory Customers
Transportation

Facility & Handling Product Flow

Information
Information Flow
 Merge In-Transit Network
Response Time
Factories
Product Variety

Product Availability

Customer
Experience
Retailer In-Transit Merge by
Order Visibility Carrier
Returnability

Inventory
Customers
Transportation

Facility & Handling

Information Product Flow

Information Flow

Storage at Distributor and Carrier Delivery

Response Time
Factories
Product Variety

Product Availability

Customer
Experience
Warehouse Storage by
Order Visibility
Distributor/Retailer
Returnability

Inventory
Customers
Transportation

Facility & Handling

Information
Product Flow
Information Flow
 Storage at Distributor and
Last Mile Delivery
Response Time

Product Variety Factories

Product Availability

Customer
Experience

Order Visibility Distributor/Retailer

Warehouse
Returnability

Inventory

Transportation Customers
Facility & Handling

Information Product Flow

Information Flow

Storage at Manufacturer or Distributor with Customer Pickup

Factories
Response Time

Product Variety

Product Availability

Customer Retailer Cross Dock DC

Experience

Order Visibility

Returnability
Pickup Sites
Inventory

Transportation
Customers
Facility & Handling

Information Customer Flow

Product Flow
Information Flow
 Comparative Performance of Delivery Network
Designs
1 – strong performance and 6 – weakest performance
Distributor
Manufacturer Manufacturer Distributor Manufacturer
Retail Storage Storage with
Storage with Storage with In- storage with storage with
with Customer Package Carrier
Direct Shipping Transit Merge last mile pickup
Pickup Delivery
delivery

Response Time 1 4 4 3 2 4

Product Variety
4 1 1 2 3 1
Product Availability 2 3
4 1 1 1
Customer Vary from
4 3 2 1 5
Experience 1 to 5

Order Visibility 1 5 4 3 2 6

Returnability 1 5 5 4 3 2

Inventory 4 1 1 2 3 1

Transportation 1 4 3 2 5 1

Facility & Handling 6 1 2 3 4 5

Information 1 4 4 3 2 5

Linking Product Characteristics and Customer

Preferences to Network Design
+2 – very suitable; 0 - neutral and -2 – very unsuitable
Retail Manufacturer Manufacturer Distributor Distributor Manufacturer
Storage Storage with Storage with Storage with storage with last storage with
with Direct In-Transit Package Carrier mile delivery pickup
Customer Shipping Merge Delivery
Pickup
High demand product
+2 -2 -1 0 +1 -1
Medium demand product
+1 -1 0 +1 0 0
Low demand product
-1 +1 0 +1 -1 +1
Very low demand
product -2 +2 +1 0 -2 +1
Many product sources
+1 -1 -1 +2 +1 0
High product value
-1 +2 +1 +1 0 -2
Quick desired response
+2 -2 -2 -1 +1 -2
High product variety
-1 +2 +2 +1 0 +2
Low customer effort
-2 +1 +2 +2 +2 -1
 Summary of Learning Objectives
 What roles do distributors play in the supply chain?
 What are the key factors to be considered when designing
the online distribution network?
 What are the strengths and weaknesses of various online
distribution options?