Download - NETWORK DESIGN1.ppt
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2007 Pearson Education 4-1
Distribution Network/Channel
Design
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2007 Pearson Education
Channel sales
Industry Telecom
Markets Wireless, Cable, Tel.
Companies C1, C2.Cn
Geography 6 Region
Challengemultiple market, multiple Cos. Multiple
region
How u get your product in the market?
How you penetrate in the market ?
4-2
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What is Channel Management ?
The design, development and
evaluation of product flow system to
enhance customer value througheffective customer acquisition,
retention and development
Single channel management
MCM
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What MCM Include In Distribution
Framework ?
Store
Web
Catalog Sales force
Third party agency
Call centre etc
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Customer Management Framework
through Multiple channels
4-5
Analyze
Customer
Develop
Multichann
el Strategy
Design
ChannelsImplement Evaluate
Develop
appropriate
customer
segmentation
for
multichannel
strategy andDesign
1.Efficiency,
Segmentation,
or customer
satisfaction
2. Asses
competition
1. Which
channelemployed
2. What
should be the
function of
each channel
3. Should
customer be
right
channeled
MarketingProgram
Organizationa
l coordination
Marketing
mix
coordination
Single view ofcustomer
Channel
accounting
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Key Issues in Multichannel Customer
Management Framework
1. Analyze Customer
Segments formed on the basis of channel usage
Different channels most likely have different needs
(e.g. convenience vs. services )
Channel segments are actionable and marketers can
design marketing program by channel
Channel-based segments are substantial as long aseach channel attracts a significant customer base
4-6
Lesson: This is all about customer segmentation on
the basis of channel usage (traditional view)
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Analyze customer
Preferences
Responsiveness
Growth potential
4-7
Lesson: This is all about customer segmentation on
the basis of channel development (modern view)
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2. Developing multichannel
strategy
Three potential vision driving multichannel strategy
Efficiency
Customer satisfaction
Segmentation
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Developing multichannel strategy-Factors Influencing Channel Efficiency
Channel Efforts as cost reduction
Inventories (higher the number of facilities in a supply chain the
inventory cost increases )
Transportation (increasing the number of facilities decreases the
total transportation cost ) Facilities and handling (Facility costs decreases as the number of
facilities is reduced )
Information (longer the channel higher the information cost)
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Developing multichannel strategy-Factors Influencing customer satisfaction
Elements of customer service influenced by channel design :
Response time
Product variety
Product availability
Customer experience
Order visibility
Return ability
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Service and Number of Facilities
Number of
Facilities
Response Time
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Developing multichannel strategy-Factors influencing Customer segmentation
Multichannel as a device for segmenting the market
Both for current customer base and new customers
4-12
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Assignment
Explain the following
Number of facilities vs. Product Variety
Number of Facilities vs. Product availabilityNumber of Facilities vs. Customer experience
Number of facilities vs. Order visibility
Number of facilities vs. Return ability
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Outline
The Role of Distribution Channel in the Supply
Chain
Factors Influencing Distribution Network Design
Design Options for a Distribution Network
E-Business and the Distribution Network
Distribution Networks in Practice
Summary of Learning Objectives
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The Role of Distribution
in the Supply Chain
Distribution: the steps taken to move and store a
product from the supplier stage to the customer stage
in a supply chain
Distribution directly affects cost and the customerexperience and therefore drives profitability
Choice of distribution network can achieve supply
chain objectives from low cost to high responsiveness
Examples: Dell distribute PCs directly to end
consumers whereas HP distributes through reseller
P & G distributes through supermarkets as well as
through distributors for small buyers
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Factors Influencing
Distribution Network Design
Distribution network performance evaluated along
two dimensions at the highest level:
Customer needs that are met
Cost of meeting customer needs
Distribution network design options must therefore be
compared according to their impact on customer
service and the cost to provide this level of service
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Factors Influencing
Distribution Network Design
Elements of customer service influenced by network structure:
Response time
Product variety
Product availability
Customer experience
Order visibility
Return ability
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Factors Influencing
Distribution Network Design
Elements of costs affected by network structure:
Inventories (higher the number of facilities in a supply chain the
inventory cost increases )
Transportation (increasing the number of facilities decreases the
total transportation cost ) Facilities and handling (Facility costs decreases as the number of
facilities is reduced )
Information (longer the distribution channel higher the
information cost)
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Service and Number of Facilities
Number of
Facilities
Response Time
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Design Options for a
Distribution Network
Manufacturer Storage with Direct Shipping
Manufacturer Storage with Direct Shipping and In-
Transit Merge
Distributor Storage with Carrier Delivery
Distributor Storage with Last Mile Delivery
Manufacturer or Distributor Storage with Consumer
PickupRetail Storage with Consumer Pickup
Selecting a Distribution Network Design
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Manufacturer Storage with
Direct Shipping
Manufacturer
Retailer
Customers
Product Flow
Information Flow
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Performance Characteristics of
Manufacturer storage with DSN
Cost Factor PerformanceInventory ?
Transportation ?
Facilities and Handling ?
Information ?
Service Factor Performance
Response Time
Product Variety
Product availability
Customer experience
Order Visibility
Return ability
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In-Transit Merge Network
Factories
Retailer
Product Flow
Information Flow
I n-Transit M erge byCarrier
Customers
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Performance Characteristics of
In-Transit Merge
Cost Factor PerformanceInventory ?
Transportation ?
Facilities and Handling ?
Information ?
Service Factor Performance
Response Time ?
Product Variety ?
Product availability ?
Customer experience ?
Order Visibility ?
Return ability ?
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Distributor Storage with
Carrier Delivery
Factories
Customers
Product Flow
Information Flow
Warehouse Storage by
Distributor/Retailer
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Performance Characteristics of
Distribution storage with carrier Delivery
Cost Factor PerformanceInventory ?
Transportation ?
Facilities and Handling ?
Information ?
Service Factor Performance
Response Time ?
Product Variety ?
Product availability ?
Customer experience ?
Order Visibility ?
Return ability ?
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Distributor Storage with
Last Mile Delivery
Factories
Customers
Product Flow
Information Flow
Distributor/Retailer
Warehouse
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Performance Characteristics of
Last Mile Delivery
Cost Factor PerformanceInventory ?
Transportation ?
Facilities and Handling ?
Information ?
Service Factor Performance
Response Time ?
Product Variety ?
Product availability ?
Customer experience ?
Order Visibility ?
Return ability ?
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Manufacturer or Distributor Storage
with Customer Pickup
Factories
Retailer
Pickup Sites
Product FlowInformation Flow
Cross Dock DC
Customer Flow
Customers
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Distribution Networks in Practice
The ownership structure of the distribution network
can have as big as an impact as the type of distribution
network
The choice of a distribution network has very long-term consequences
Consider whether an exclusive distribution strategy is
advantageous
Product, price, commoditization, and criticality have
an impact on the type of distribution system preferred
by customers
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Summary of Learning Objectives
What are the key factors to be considered when
designing the distribution network?
What are the strengths and weaknesses of various
distribution options?What roles do distributors play in the supply chain?