We Are Making Business More - Efficient And Helping Business - Create More Efficient World

1. We Are Making Business More - Efficient And Helping Business - Create More Efficient World Let us make it out business to make a difference The supply chain company

2. Why Customers Quit ? 1 % Die 3 % Move away – U S 5 % move because of friendship 9 % for competitive Reasons 14% because of product dissatisfaction 68% because of the attitude of indifference on the part of an employee

3. Supply Chain Management Has To Ensure That The Required Product /Material Is At The Right Place At The Right Time At The Right Price

4. Today Customer is God Business has Shifted from Product Centric to Customer Centric

5. Defining Marketing Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products and value with others.

6. Place Product Price Promotion The Four Ps Marketing Mix

7. Place Distribution Management Marketing Mix

8. The toothpaste story Chosen time Customer

10. Distribution Versus Management Distribution Activities concerned with efficient movement of products and raw materials from producers to consumers Management Planning Organizing Directing Monitoring Controlling

11. Definition of Distribution Management Management of all activities which facilitate movement and co-ordination Of demand in the creation of time and place utility in goods. The art and science of determining requirement , acquiring them, distributing them And finally maintaining them in an operationally ready condition for their entire life. Activities concerned with efficient movement of products and raw materials from producers to consumers

12. Shift from manufactures acting as distribution To appoint intermediaries ? Markets were expanding, increasing cost – not manageable

13. Need for distribution channel • Three intermediaries who can perform various activities of distribution • C & F AGENT ( C & FA) • Distributor • Retailer These channels or intermediaries help the process of exchange of the product or service at a certain margin to themselves. They bring the product nearer to the customer

17. Performance of a distribution net work 1. Customer needs that are met 2. Cost of meeting customer needs Distribution cost is about 30% of the cost of producing cement in India In the U.S. Distribution related cost are a whopping 10.5 % of the Economy

18. Intermediaries are expected to perform the following functions • To accumulate the right kind of goods, • to aggregating and sort the products to meet • the consumers needs at the point of purchase - eg. Food world • 2. To work with large no. of products so • that the distribution costs are minimized • 3. To provide information to the seller and the buyer • to help them manage their Business better – • helps the buyer in deciding at the store – • gives feedback to the company Of the movement of size & strengths . • 4. To be aware of the environment in which they operate • and isolate the manufacturer From direct impact of • these local conditions – expiry date- storage of drugs, Or food . • 5. To have a good coverage in the area so that more • retailers are within the reach. maybe reach thousands of accounts.

19. Are intermediates or distributors necessary ? The most popular argument is in favor of having one because Manufacturers produce large quantity of a limited number goods Where as a consumer would buy small quantities of large no. of goods. Monthly list of a house wife would be 30 to 40 items from 12 to 15 companies.

20. Are intermediaries Necessary ? 1 Amazon and Dell – Directly deal with the customer 2. Bata India is a case in point - has its own distribution network of hundreds of Own outlets . 3. Eureka Forbes – ( Asia’s direct sales Company ) • Cost is the major consideration for the company to handle own • distribution And to reach millions of outlets . • Cost efficiency and effectiveness of indirect distribution are higher • than in case of Direct distribution. • Hence a whole seller or a retailer plays an important role.

21. Factors InfluencingDistribution 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

22. Factors InfluencingDistribution Network Design • Elements of customer service influenced by network structure: • Response time • Product variety • Product availability • Customer experience • Order visibility • Returnability • Supply chain costs affected by network structure: • Inventories • Transportation • Facilities and handling • Information

23. Customer service Response time = is the time taken for the customer to receive an order • Product variety = different products/ configurations offered by the distribution network Product availability = it is the probability of having a product in stock when a customer Order arrives Customer experience = the comfort of ease with which a customer can place an order also includes how a customer is taken care of tea/ coffee Time to market = is the time it takes to bring a new product to the market Order visibility = is the ability of customers to track their orders from placement to Deliver Returnability = is the ease with which a customer can return unsatisfactory product.

35. Service and Number of Facilities Number of Facilities Amazon vs Borders stores W.W. Grainger promises Same day delivery Response Time

36. Inventory Costs and Numberof Facilities Inventory Costs Number of facilities

37. Transportation Costs andNumber of Facilities Transportation Costs Number of facilities

38. Facility Costs and Numberof Facilities Facility Costs Number of facilities

39. Total Costs Related to Number of Facilities Total Costs Total Costs Facilities Inventory Transportation Number of Facilities

40. Variation in Logistics Costs and Response Time with Number of Facilities Response Time Total Logistics Costs Number of Facilities

41. Manufacturer Storage withDirect Shipping Manufacturer Retailer Customers Product Flow Information Flow

42. In-Transit Merge Network Factories In-Transit Merge by Carrier Retailer Customers Product Flow Information Flow

43. Distributor Storage withCarrier Delivery Factories Warehouse Storage by Distributor/Retailer Customers Product Flow Information Flow

44. Distributor Storage withLast Mile Delivery Factories Distributor/Retailer Warehouse Customers Product Flow Information Flow

45. Manufacturer or Distributor Storage with Customer Pickup Factories Cross Dock DC Retailer Pickup Sites Customers Customer Flow Product Flow Information Flow

46. Comparative Performance of Delivery Network Designs Retail Storage with Customer Pickup Manufacturer Storage with Direct Shipping Manufacturer Storage with In-Transit Merge Distributor Storage with Package Carrier Delivery Distributor storage with last mile delivery Manufacturer storage with pickup 1 4 4 3 2 4 Response Time Product Variety 4 1 1 2 3 1 Product Availability 2 3 4 1 1 1 5 Customer Experience 5 4 3 2 1 5 1 4 3 2 6 Order Visibility 1 5 5 4 3 2 Returnability 4 1 1 2 3 1 Inventory 1 4 3 2 5 1 Transportation 6 1 2 3 4 5 Facility & Handling 3 Information 1 4 4 2 5

47. Retail Storage with Customer Pickup Manufacturer Storage with Direct Shipping Manufacturer Storage with In-Transit Merge Distributor Storage with Package Carrier Delivery Distributor storage with last mile delivery Manufacturer storage with pickup High demand product Medium demand product Low demand product Very low demand product Many product sources High product value Quick desired response High product variety Low customer effort Linking Product Characteristics and Customer Preferences to Network Design +2 -2 -1 0 +1 -1 +1 -1 0 +1 0 0 -1 +1 0 +1 -1 +1 -2 +2 +1 0 -2 +1 +1 -1 -1 +2 +1 0 -1 +2 +1 +1 0 -2 +2 -2 -2 -1 +1 -2 -1 +2 0 +1 0 +2 -2 +1 +2 +2 +2 -1

48. Distribution channels members take care of four discrepancies Need for a Distribution channels to cover Spatial discrepancy - distance from the manufacturer and the consumptions point Temporal discrepancy – time difference and time of consumption. In between The product have to made and stored at many locations and planning to get the Stocks in those locations. e.g. Maruti Udyog – Gurgaon Need for breaking the bulk - breaking the large quantities into consumable Quantities . – toothpaste comes in cartoon packed .( 240 ) each retailer like to Have 6 or 12 in each purchase - truck loads of goods are broken down at the C & F POINTS and sent to the distributors and similarly the distributor breaks a And sends to retailers.

49. Need for assortment 1. separation into classes. 2. A collection of various kinds; a variety. Need for Financial Support They finance the inventories after the goods leave the manufactures Till they reach the end user. They help provide credit facilities to their buyers

50. Are intermediaries Necessary ? 1 Amazon and Dell – Directly deal with the customer 2. Bata India is a case in point - has its own distribution network of hundreds of Own outlets . 3. Eureka Forbes – ( Asia’s direct sales Company ) • Cost is the major consideration for the company to handle own • distribution And to reach millions of outlets . • Cost efficiency and effectiveness of indirect distribution are higher • than in case of Direct distribution. • Hence a whole seller or a retailer plays an important role.