Distribution and Logistics

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Distribution and Logistics

• KIM, SUNG-HAN
• (jamjalee_at_icu.ac.kr)
• ACE Lab, IT Business, ICU

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Learning Objective

• To understand the basics of supply chains
• To understand how the Internet affects supply
  chains

• To learn about the four stages of supply chain
  evolution
• To understand the basics of distribution channels
• To examine e-fulfillment issues for online
  retailers

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Introduction

• What is a supply chain?
• A supply chain consists of a companys links to
  other corporations that help it deliver products
  to the individual consumer.

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Flows within a Supply Chain

• Three flows exist within a supply chain

• Physical goods
• Money
• Information

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Flows within a Supply Chain (continued)

• What is the bullwhip effect?
• Even though customer demand may be relatively
  stable, one observes greater variability in
  orders as one moves up a supply chain.

(Source www.mriresearch.com)
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Benefits of Internet Technology

• How can the Internet technology help supply chain
  management?

• By allowing participants in a supply chain to
  share knowledge.
• Companies can respond faster to changes in
  customer demand.
• By helping companies reduce the costs of serving
  a market.

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Four Stages of SCM Evolution

• Four stages traditional, integrated,
  collaboration, and synchronization
• Traditional supply chain each company thinks of
  itself as an island that does not have to share
  any information with the others.
• Integrated supply chain there is information
  sharing within the business functions of a
  company however, there is no information sharing
  with outside firms.
• Collaborative supply chain there is broader
  information sharing with suppliers and customers.
• Synchronized supply chain distinguishes itself
  from the collaborative supply chain by even
  greater dependence The goal is not just to
  share information, but also to synchronize
  operations.

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Introduction to the Distribution Channel

• Distribution channel defined
• The distribution channel is the portion of the
  supply chain that stretches from the manufacturer
  to the consumer.
• A company needs intermediaries for the following
  reasons
• They reduce the cost of distribution.
• They shield manufacturers from risk.
• They help manufacturers target products.
• They structure information essential to consumers.

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E-Fulfillment-The Greatest Challenge to E-Tailers

• Four E-Fulfillment Strategies
• Logistics postponement is a good strategy when
  markets are turbulent.
• Resource exchange strategy is important when
  distances are large.
• Leveraged shipments fulfillment strategy is
  important when order size is small and consumers
  are distributed geographically.
• Bricks-and-clicks is effective if product returns
  are expected.

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E-Fulfillment-The Greatest Challenge (continued)

• E-Fulfillment Delivery Models
• Direct to consumer the consumer places an order
  with an online retailer, which has the product in
  stock and ships it to the consumer.
• Consumer direct the consumer orders from
  either an online retailer or from the
  manufacturers web site.
• Sell-source-ship the order is placed at an
  online retailer, then passed on to the
  manufacturer, who ships to the retailers
  distribution center.

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E-Fulfillment-The Greatest Challenge (continued)

• Organizing for E-Fulfillment
• What aspects of the operation are centralized and
  those that are decentralized.
• Which aspects are conducted internally and which
  are outsourced.

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E-Fulfillment-The Greatest Challenge (continued)

• Factors to Consider When Designing an
  E-Fulfillment System
• The true costs of online fulfillment must be
  measured, and a plan must be developed to lower
  all costs.

• The possibility of having a competitive advantage
  regarding time to delivery and customer service.

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E-Fulfillment-The Greatest Challenge (continued)

• Factors to Consider When Designing an
  E-Fulfillment System (continued)
• Create a plan for the integration of the web site
  and the back-end processes.
• Do not assume that existing logistics operations
  are well suited for e-tailing and that existing
  suppliers can meet all needs.

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• Thank you!