Designing Distribution Network in a Supply Chain

It consist of a set of people and firms(Intermediaries) involved in the transfer of ownership of the product from the producer to the ultimate consumer or industrial users. .Distribution Channel   Distribution channel is the route by which a company distributes its goods.

Role of distribution channel    Time Utility –is created when marketing channel have product & services available for sale. Place Utility-is created when product and services are available where consumer want to buy them. when the consumer wants to buy them. Ownership or Possession Utility –is created when the title to the goods passes from the manufacturer or intermediary channel member to the buyer .

Functions performed by Distribution Channels           Physical distribution functions Breaking Bulk Accumulating Bulk Creation of assortments Reducing transactions Transportation & Storage Communication functions Facilitating functions Credit Services Risk taking .

Determining intensity of distributions.Designing Distribution Channels     Specifying the role of distributions. Choosing specific channel members . Selecting the type of channel.

Channel Design Process         Establishing the channel objective Formulating a channel strategy Evaluating alternative channel structure Selecting the appropriate structure Determining alternative for individual channel members Evaluating & Selecting individual channel members Measuring & evaluating channel performance Evaluating alternatives when performance objectives are not met or attractive new .

Consideration of Channel Design     Market Coverage Objective Product Characteristics Objective Customer service Objective Profitability Objective .

Market Coverage Objective     Customer buying behavior The type of distribution required Channel structure The degree of control necessary for success .

Product Characteristics Objective          Product value Technicality of product Degree of market acceptance Degree of substitutability Product Bulk Product Perish ability Degree of market concentration Seasonality Width & Depth of Product line. .

Customer Service Objective    Availability Order Cycle Communication .

.Profitability Objective   Corporate cost of money applied to accounts receivables Corporate opportunity cost of money used as a charge for all other assets acquired by each channel alternatives.

Design options for distribution network       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 costumer pickup Retail storage with customer pickup .

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 costumer pickup .

Retail storage with customer pick-up .

End of Lecture .

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