Supply chain management

Submitted To: arsalan najmi

Topic: The role of distribution center in supply chain management

Submitted BY: Ghazal Shafiq Id: 022-15-110861 Mba(M)Date: 4nd july,2015

ACKNOWLEDGEMENT:

I express my deep sense of gratitude and sincere thanks to all who motivated me in various ways in the preparation of this assignment.It is honored to convey my heartfelt thanks to Sir Arsalan Najmi for having introduced this topic in the syllabus which helped to acquire wide experience and knowledge and for having encouraged me to complete this assignment successfully.

Table Of Content S.NoTopic Page #

1.Supply chain management & process1

2.The role of distribution center in supply chain management

1

3. Warehousing Distribution2

4.Impact of improper warehousing and distribution center3

5.Distribution centers in supply chain management3-5

6.Key functions of distribution centers6

7.Factors influencing distribution center6-7

8. Conclusion7

The Role Of Distribution center in supply chain management

Supply Chain ManagementManagement of the flow of goods or services between entities in the chain to realize delivery of end products or services, satisfying customers at minimum cost.Supply chain process

The Role Of Distribution center in supply chain management

Although warehouses and distribution centers appears to be interchangeable terms, they do have different characteristics. A warehouse is a commercial building where goods are stored for some period of time, while the distribution centers trends to store for goods for short time as per requirement of orders fulfilment i.e on daily basis or weekly or monthly basis. If only a distribution center is used in supply chain, the production units would need to constantly produce orders to replenish a distribution center servicing retail stores. Longer and globally oriented supply chain have often required usage of warehouses where the output of production units can be stored. Such warehouses can be used to replenish the orders of distribution centers that can be quite distant (example long distance container shipping).WarehousingA warehouse is a large, spacious and secured building intend for commerce and government use. It functions as a storage place for large quantities of goods.There are three types of warehouses i.e public, company-owned and owned by third party logistic (3PL). The government uses public warehouses to store temporarily. The business sector usually restores to company-owned or 3PL. Warehousing may also cover the completion of goods before distribution. The components and packing materials are just delivered to the building. The assembly and packing of goods will be done in warehouse. The product cover will still look new and enticing upon delivery to distribution centers. DistributionDistribution refers to the delivery of finished goods to buying centers like retail stores, markets and super marts. Some manufacturers deliver their goods directly to their accredited retailers. This is advantageous when retailers business establishment are just nearby the manufacturers place.Direct delivery of goods to retailers can save you from warehousing costs. However, if you are far from distribution centers, you have to deal with the logistic cost and inventory frequently.Thus, it is safe to say that warehousing and distribution go hand-in-hand in providing a more cost effective way of delivering goods. Some warehouses are also utilized as a buying or retailing center while maintaining its original function.

Impact of improper warehousing and distributionMajor and minor mistakes alike in warehousing and distribution can result high losses. Incorrect storage can damage the goods. If the damaged goods are sold, they will either be sold in a much lower price or not be sold at all. The manufacturers will not be able to get back their investments. Failures to deliver the goods to the right destinations will cause the business to cover another round of delivery costs to do two things: to bring back the wrong goods and to deliver the right ones. Due to delay, goods can get damaged and intended recipients may not want to accept and pay for the delivery.Another adverse effect of wrong warehousing and distribution is that it can destabilize the prices of goods. If there is not enough supply due to the incompetence of the warehousing management, the prices of goods may raise to meet the unchanged demand of the consumers.

Distribution centers in supply chain management

Distribution refers to the step taken to move and store product from the supplier to the end customer in the supply chain. Distribution is the key driver of overall profitability of a firm as it impacts directly both the supply chain cost and the customer experience. Goods distribution can be used to objectives that ranges from low cost to high responsiveness.Distribution centers add little or no value for product brought in bulk amount with little or no time sensitivity associates with their use. Product insensitive to transportation costs also typically move directly to customers. Similarly for other product distribution centers provide value added role making supply chain more effective and efficient.Distribution centers add efficiency by consolidating product for shipment to customers, reducing transportation costs and performing value addition to service (e.g. branding, labeling, assembling, packaging, etc). Distribution centers also make the supply chain more effective. The strategic placement of distribution centers allows the positioning of products and services close to major markets and customers. Optimization strategies are utilized to position product availability and delivery as a competitive advantage while also optimizing the cost trade-off associates with transportation, facilities, equipment workforce and other critical cost variables. Distribution centers also facilitate the time utility by storing until it is demanded.Product type often determines the need for and specific role of distribution centers in the supply chain. Characteristics to be considered includes: Seasonality in either production and consumption. Demand variability Manufacturing economics Marketing and promotion initiatives Transportation economics Service requirements Customizability and variants of productsProducts that have extremely high services requirements from a time perspective present unique challenges since they often effect the efficiency, performance and cost of customers operations.Postponement is also becoming a critical issue and value added service for distribution centers when demand is unpredictable it often makes sense to assemble and ship to order. Inventories remain generic providing more flexibility and reducing costs. Postponement is particularly effective in supporting customer product configuration and branding requirements.Company capabilities to determine distribution center requirements are essential for achieving successful networks and operations. Distribution center requirement includes location, design and operations, determining the information and technology requirement, and measuring performance. Location: Distribution center location is determined based on location of market and customer, location of supplier, volume of product, transportation rates and the product characteristics, Local conditions includes cost of labor, land and building, IT infrastructure, transportation structure and government policies. Design and operation: The product, how it is received, the nature of customer orders, service levels and transportation mode are the primary determinants of distribution center design and operation. Product characteristics include weight, packaging, shelf life, temperature, etc. How the product is received is critical to both inbound operation efficiency and space utilization. Information and technology: Information is the critical driver for successful distribution center operations. Short-term forecast provide information to determine labor and space requirements over short term planning horizon. Long-term forecasts are used for capacity planning (distribution center size, workforce and equipment requirements). Information technology is critical in achieving distribution center performance. Warehouse management system directs where products should be store and provide the necessary functionality for the completion and optimization of receiving, storing and shipment operations, additional functionality may permits use of hand held devices, bar coding to optimize efficiency and reduce errors. Measuring performance: Distribution centers primary objective is to provide right product, at the right place, in right time and damage free. Distribution center most common performance measure includes handling productivity, space utilization, accuracy, damage, service, cost and inventory. Handling productivity measured in units or lines picked per hour. Space utilization is evaluated based on total space available storage. Accuracy includes measure of location and record accuracy, percentage of item pick correctly and percentage order pick correctly. Damage measure includes percentage item picked undamaged when receive by customer and percentage of order picked undamaged merchandise. Service measures includes fill rate which is based on number order that were filled completely.

Key Function Of Distribution centers A distribution center offers value-added services: A well organized and managed distribution center will provide services like transportation, cross-docking, order-fulfilment, labeling and packaging along with services are necessary to complete the order cycle including order processing, order preparation, shipping, receiving, transportation, returned goods processing and performance measurement. A distribution center is customer focused: Distribution center mission is to provide outstanding services to its customers. A distribution center is technology-driven: distribution centers of today must have in place state of art order processing, transportation management. A distribution center is relationship-centric: Distribution center must remain focused on its customer requirements. Distribution center link between supplier and customer, and its management not only fulfil the customer need efficiently and cost-effective methods of meeting those needs.

Factors Influencing Distribution CenterPerformance of distribution network should evaluated in two dimension Meet customer needs Cost meeting customer needsCustomer needs that met influence companys revenue, which along with decided cost the profit of delivery network. Customer service consist of many components.Some of them are influenced by structure of distribution network, these includes: Response time (i.e time between customer places order and receives delivery) Product variety (i.e number of different products that customer desires from distribution network) Product availability (i.e availability of products in stock when a customer order arrives) Customer experience (i.e the ease with which customer places and receives their order) Order visibility (i.e ability of customer to track their order from placement to delivery) Return ability (i.e customer can return unsatisfactory goods and ability of distribution channel to handle such return)

ConclusionDistribution centers add value to the supply chain management between a supplier stage and customer stage. Improvement in supply chain performance due to some reasons: Reduction in inbound transportation cost. Reduction in outbound transportation cost because distribution center combines products from many suppliers in to single outbound shipment. Somehow it allows to lower cost by planning production more effectively. By carrying product near to the point of sale distributors provides better responsive time than manufacturers can. Distribution centers may able to offer one stop shopping with products from several manufacturers.