TECNOLÓGICO NACIONAL DE MÉXICO

INSTITUTO TECNOLÓGICO DE NUEVO LEÓN

SUBDIRECCIÓN ACADÉMICA
DEPARTAMENTO DE EDUCACIÓN A DISTANCIA
INGENIERÍA EN INGENIERIA INDUSTRIAL

LOGISTICA Y CADENA DE SUMINISTRO

Tema 6

Investigación

Catedrático.

Presenta:
Jahir Orlando Zapata Morales 18480769

Cd. Guadalupe, Nuevo León; a 03 de junio de 2022

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Índice

What is distribution of strategic………………………………………………..3

the importance of the strategic…………………………………………………4,5

the main factors and variables to control in the design of the distribution network
of a company……………………………………………………………………...6,7

Types of distribution networks………………………………………………….8

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 Distribution strategy involves coming up with an efficient method of
disseminating your company’s products or services. The goal of this type of
strategy is to maximize revenue while maintaining loyal customers. Your business
creates a strategy based on your target customer, and you may use more than
one strategy to reach more than one type of target customer.

Your strategy approach should focus on factors such as how your ideal
customer buys your products or services and how your customer would prefer to
buy them. Consider these kinds of questions when planning your distribution
strategy:

• Who is your ideal customer?

• How does the product or service fit the person’s lifestyle?

• What type of purchase decision does it require?

• What are the main priorities for your customers? For example, do your
customers care more about cost or convenience?

• Can you improve the purchasing process to make it better and easier for
your customer?

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Distribution is often an unrecognized and under-appreciated element of strategy,
yet it is almost always an important factor in a winning strategy. Here’s how these
forms distribution can play a key role in strategy:

Open new markets. Opening a new channel of distribution or expanding

distribution into new geographic areas can give new groups or new types of
consumers access to a company’s products or services. For example, a coffee
manufacturer selling its coffees only in supermarkets might decide to buy its own
trucks and start an office coffee business to deliver coffee directly to workplaces.
Or, the coffee manufacturer might open its own coffee shops, or distribute coffee
in new geographic areas.

Speed up delivery. Distributing a product or service more quickly is sometimes

enough of an advantage to justify a new distribution strategy. Speed-of-delivery
combined with a direct-to-consumer business model and possibly smartphone
app convenience may forge a new distribution strategy.

Reduce costs. If a new system of distribution or improved logistics can

significantly reduce costs and improve profit margins, then that distribution
strategy might be worthy of pursuit. For example, if a retailer is operating a very
expensive retail-store distribution system, the retailer might benefit from shifting
some of its sales to an online distribution system to save money.

Reduce out-of-stocks. If retail out-of-stocks is a major problem in an industry or

product category, then a new distribution strategy might be necessary. Often, an
out-of-stocks problem must be attacked with one eye on marketing and
promotional activities and the other eye on supply chain and logistics. What looks
like a logistics problem might actually be a promotional problem (i.e., consumer
promotions might be causing the out-of-stock problem).

Achieve distribution. If a small company with limited resources developed an

appealing new product, but can’t get its new product on the shelf in retail stores,
then it could approach a major retailer and offer to distribute its new product
exclusively in that retailer’s stores. While this strategy limits the upside potential
of a new product because it limits distribution possibilities, it might still be a wise
strategy for a small company (limited distribution is better than no distribution). A
variation of this strategy is to offer the new product to each retail chain under an
exclusive brand name/private label.

Burnish a brand image. The types of stores a product is placed in can shape
and reinforce the consumer’s image of that brand. For instance, a luxury brand
might choose to be distributed exclusively in upscale, high-end retail stores. In
contrast, a brand targeting a mass market might seek distribution in every
channel and every nook and cranny of the economy.

Block a competitor. If a manufacturer should become aware that a major

competitor is planning to massively expand its online presence and direct-to-
consumer business activity, then that manufacturer might aggressively expand its

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own direct-to-consumer channel of distribution as a blocking action or delaying
tactic to blunt the competitor’s actions.

While these are just some ways that distribution can play a direct or supporting
role in strategy, here’s how a company get to an optimal distribution strategy:

Qualitative research among consumers, customers, dealers, salespeople and

workers in the distribution system provides observations, understanding and
knowledge that can suggest viable distribution strategies, identify logistic
alternatives and develop hypotheses about how to improve or optimize a
distribution network.

Survey-based research yields statistically projectable knowledge about the

attitudes, observations and behaviors of consumers, retailers, dealers and
distribution workers. The goal is to not only prove or disprove some of the major
hypotheses developed during the qualitative research, but also to determine the
relative appeal of various distribution models to end-customers, retailers, dealers,
distributors, etc.

Secondary data is often used to help optimize a distribution system. Such data
might include population and demographic data; economic data and trends;
consumer spending data by product category and type of household;
transportation alternatives, delivery times and relative costs; traffic patterns and
congestion data; competitive data, etc. The exact types of secondary data
required vary by type of product or service and the geographic area.

Modeling and optimization might be a final step to combine all of this

knowledge with the hypotheses, preferences and the many types of data into one
or more simulation models. The modeling process involves maximizing or
minimizing a desired outcome, given various inputs and constraints.

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Benefits of a market-oriented network

Redesigning a distribution network, or designing one from the start, should yield
benefits like optimizing the company’s total logistics costs, improving service levels
for intermediate and final clients, increase flexibility, improve the response capacity,
and many others. In short, according to the experience of Accenture Mexico, the
benefits of a distribution network focusing on the market are:

• Minimizing investment by decreasing assets by 10% to 30%.

• Lowering investment on the logistics process by 10% to 30%.
• Raising the percentage of product availability and reach excellence in
customer service, which results in a 2% to 5% increase in income.
• Optimizing inventory management by reducing them by 10% to 20% without
losing flexibility and response capacity.

Goals of network design

Hence the importance of putting time and effort into the creation or redesign of the
distribution network, based on these considerations:

• Make sure products are always available in the inventory when clients
request them.
• Minimize the time it takes an order to go through the whole process.
• Manage the shipment of different products requested by the same client.
• Offer clients the chance to monitor their orders in real time.
• Offer clients a great experience from the moment they create the purchase
order until it is delivered correctly and on time, including payment and
monitoring.
• Open channels of communication to enable clients to return products easily.

Having an efficient logistics distribution network implies reaching a balance between

the level of service and the reduction of costs.

Steps to take

To meet these goals, the design or redesign of a distribution network should follow
this process:

1. Understand the business strategy, including the company’s annual growth

forecast, number of product categories, new acquisitions, etc., in order to
learn more about the present and future distribution needs.
2. Clearly define the target customer service level and how to reach it; for
example, attention incidence, delivery formats, among others. The customer
service indicators related to promise fulfillment will yield valuable findings for
the design of the distribution network.
3. Addressing the business strategic goals and the service promise made to the
client, forces us to assess the financial and physical resources, running
simulations for each distribution scenario until a balance of costs and
customer satisfaction is reached.

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 4. Define the network’s scope considering processes, routes, and the need of an
intermediate distribution center; all this based on the number and locations of
clients, products assortment, and sales volume. This definition should include
the combination of network’s elements that make the customer satisfaction
strategy easier, and minimize overall costs, not only in one section.
5. Identify the budget or facilities’ limitations to assess the convenience of
outsourcing logistics and distribution to a specialized logistics supplier.
6. Analyze what the competitors are doing to detect weaknesses and
opportunities for improvement. Likewise, analyzing the environs will help
detect threats and opportunities that help optimize the distribution
strategy; the applicable regulations and the characteristics of the product and
its transport terms are among these threats and opportunities.
7. Choose distribution network design software that enables the analysis and
simulation of the best network, one that is innovative and flexible to the
everchanging needs of the market and the company, so you can make faster
decisions. You can find several specialized design tools for this type of
network in the market, and logistics suppliers that offer network design with
the help of state-of-the-art technologies.

The key for turning your distribution network into a competitive advantage is to focus
it on clients.

Customer satisfaction should be your main goal; aiming to reach a balance between
the efficiency of the supply chain and the optimization of resources.

By integrating logistics solutions, Solistica offers clients the optimization of their

supply chains with a distribution design that focuses on their current needs and with
the potential of escalating it as their logistics processes adjust to meet the changes in
the market.

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Types of distribution networks

There are several types of distribution networks according to the company’s

needs and logistics requirements:

• Direct from the manufacturing plant to the client

• From a supplier of raw materials to the manufacturing plant

• Through suppliers of logistics services

• Using warehouses

• Staggered

Companies may choose one or several types at the same time, depending on
their needs and budgets but always keeping in mind that all the elements
involved in designing or redesigning the network have an important relationship
between them. Inventories, transport, infrastructure, and information should reach
a balance in costs to result in the best possible distribution strategy.

Therefore, the efficient design of a distribution network becomes more relevant

because it optimizes resources, saves on costs, and outlines the supply chain
stage where it meets the end consumer, aiming always to provide quality
services, a factor that often determines the competitiveness of a logistics
supplier.