Network Design in Supply Chain

18. 12. 2011 Fusun Ulengin MANUFACTURER OR DISTRIBUTOR retentivity WITH CUSTOMER tear-me-up 18. 12. 2011 Fusun Ulengin MANUFACTURER OR DISTRIBUTOR STORAGE WITH CUSTOMER PICKUP ? Inventory is stored at the distributor or manufacturer ? Orders are shipped to designated pick-me-up points where customers come and pick up their gild 18. 12. 2011 Fusun Ulengin MANUFACTURER OR DISTRIBUTOR STORAGE WITH CUSTOMER PICKUP ? salute factors ? Inventory is low, aggregation at the manufacturer or distributor ? Transportation is lowest when using package carrier referable to aggregation at pickup locations Facility and handling facility costs are high if pick-up location does not exist already. Handling costs at pickup locations are high. ? Information system More elaborative and sophisticated, extra system at the pickup locations. ? Service factors ? Response times comparable to delivery with package carriers ? client experience worse since customer has to pickup the item himself. On the oth er hand, since customer do not need to wait at space for delivery and customer wad pay cash at the pickup location instead of paying online in advance, some customers may uniform pickup option better. Time to market is similar to other options with manufacturer storage ? Order visibility is very important. Customers should be informed when their orders arrive. ? Returns are easier to handle at pickup location. Returns tush be aggregated and shipped back from pickup locations. 18. 12. 2011 Fusun Ulengin RETAIL STORAGE WITH CUSTOMER PICKUPS ? Inventories are stored in retail stores, customers walk into the store to pick the items they want or items they have ordered online or by phone. Mixed order placement options. Most traditional option. 8. 12. 2011 Fusun Ulengin RETAIL STORAGE WITH CUSTOMER PICKUPS ? Cost Factors ? Inventory costs are higher than other options as the inventories are disaggregated and held locally ? Transportation costs are lower than other solutions. Inexpensi ve modes can be used to replenish inventories at retail outlets. ? Facility costs are high. Many local facilities. ? Information system Minimal if there is no online ordering option. For online option more complex information system especially for order visibility. ? Service Factors Response times are very good. Same twenty-four hour period pickup for most products. ? Product shape is lower than other options. ? Product availability is costly to keep high. ? Customer experience depends on if the customer likes to ca-ca or not. ? Time to market is highest. ? Order visibility is important if online ordering is allowed. ? Returns can be handled at the stores easily. 18. 12. 2011 Fusun Ulengin E-BUSINESS AND THE DISTRIBUTION NETWORK ? Impact of E-Business on Customer Service ? Response time For product that can be downloaded very fast.For physical products takes longer to fulfill an order than regular retail stores. ? Product variety easier to offer variety than brick-and-mortar stor e. (Amazon imagine the retail store with the same variety offered by Amazon) ? Product availability Better information gathering and forecasting. Better mach among put up and demand, improved product availability. ? Customer experience ? ? ? Access 24 hour access. Geographically eliminating the access limits. Customization customization of product and shopping experience. Dell, Amazon displays related products) gadget Making the purchase at where you are.. Increased speed of conducting business. (e. g. Use of previous data for address info) ? Time to market Fast. A new product can be made available as soon as a the first unit is ready. Dell exploits this feature. ? Order visibility Critical to provide. Internet makes this happen. ? Returnability Harder discommode compared to traditional stores since items are sent from a central location usually. More returns with online purchases. 18. 12. 2011Fusun Ulengin E-BUSINESS AND THE DISTRIBUTION NETWORK ? Impact of E-Business on Custo mer Service ? Other benefits of e-business ? ? ? 18. 12. 2011 raise revenues for manufacturers by eliminating intermediaries and having direct contact with customer. Dell v. s. HP. Flexible pricing, promotion and product portfolio ? Airline last-minute low cost seat, Dells ability of active pricing depending on the component availability and demand. Efficient fund transfers Quicker and cheaper. Fusun Ulengin E-BUSINESS AND THE DISTRIBUTION NETWORK Impact of E-Business on Cost ? Inventory Better mach of supply and demand, geographical aggregation lowers inventories. Ability of postponement also helps reducing inventory costs. ? Facilities and Handling ? ? ? ? Less and centralized facilities, fewer intermediaries lower facility cost. E-business can shrivel up the handling costs in order fulfillment by having the customer do some part of the process, e. g. checking product availability, entering details of the order. Smoothing the rate of order fulfillment, thus reducing the resourc e requirements.Unlike the retail stores orders dont have to be processed as soon as they arrive. On the downside, for some products like groceries, an e-business has to carry out some tasks currently performed by the customers at retail stores. E. g. Picking the items customer wants and carrying home. ? Transportation Usually higher cost due to increase outbound transportation costs. For downloadable products, significantly less transportation cost. ? Information Shared demand information, better coordination and collaboration reduces the overall supply chain costs.The cost of reach up the information system required can be significant. 18. 12. 2011 Fusun Ulengin E-BUSINESS AND THE DISTRIBUTION NETWORK ? The value that e-business brings is not the same in every industry. ? Dell a success story while Webvan is a failure ? E-business-Scorecard can be used to help decide if e- business is appropriate for your business, how it effects your distribution profit in costs and customer ser vices. ? All the costs and customer service factors are given a integer score from +2 (very positive) to -2(very negative) 18. 12. 2011 Fusun Ulengin