Embed Size (px)
Citation preview
Distribution IndustryMaking the Connections, Selling the Goods
By Janetta Soup & Qiang Han
Distribution Industry
BY Janetta Soup & Qiang Han
Outline
• The Structure• Global Logistics• Transportation• Technology (E-Commerce)• Case Analysis: Amazon. COM & SCM• Role of State• Transnational Retailing• ???
The structure of the distribution Industries
• Definition of Distribution Physical movement of materials and goods - transportation
infrastructure
Transmission and manipulation of information
• Object and Primary Purpose Minimize logistics costs while delivering maximum customer
service
Minimize time-space friction & max speed
The Structure of Distribution Industries
• Essential Function Intermediation between
buyers and sellers at all stages of the production chain
Driven by the demands of the final consumer
(In reality, there are political, and other boundaries to complicate the basic system, such as…)
The structure of the distribution Industries
• Two Barriers to Distribution : Physical Conditions:
Land/Water interfaces Political Boundaries:
Customs clearance, tariffs, duties, administration and the like
The structure of the distribution Industries
• Major Types of Organization Transportation companies – Nedlloyd Logistics Service Provider – FedEx Wholesalers – Costco Trading Companies – Sogo Shosha Retailers – Wal-Mart E-tailers – Amazon. COM
Global Logistics
• What is Logistics:
Logistics management describes the integration of activities necessary to ensure the efficient flow of raw materials, in-process inventory, and finished goods from producers to customers.
• Seven “R”sRight product, Right quantity, Right condition, Right place, Right time, Right cost Right customers.
Global Logistics• Four Major Types of Logistics Service Firm: Port
to port, door to door, desk to desk, pocket to pocket.
Global Logistics
• Trading CompaniesTrading companies are one the oldest forms of organization in the distribution services
Long – distance trade
Facilitating trade in materials and products
Global Logistics
• Trading Companies
Japanese Sogo Shosha: “General trading Company” Initially to organize exchange and distribution within the
Japanese domestic market First Japanese companies to invest on a large scale outside
Japan Organize the flow of imports of much-needed primary materials
for the resource-poor Japanese economy Channel Japanese exports of manufactures to overseas markets
“Third-country trade”
Global Logistics
Global Logistics
• Japan Sogo Shosha Perform Four Specific Functions:Trading and transactional intermediationFinancial intermediationInformation gatheringOrganization and coordination of complex
business systems
Transportation
• Transportation provides the movement of goods necessary in the supply chain.
• Five basic modes of transportation are: Airlines Motor carriers Pipelines Railroads Water carriers
Transportation-Continued
• All transportation modes can be evaluated on these seven criteria:
Cost - charges for transportation Speed - time of transit Reliability - meeting schedules on time Capability - ability to transport various products Flexibility - door-to-door delivery Capacity - ability to carry amount of tons in trip Frequency - scheduling
Transportation Chart
Advantages Disadvantages
Airlines Very fastFrequent departuresReasonably reliable
High CostLimited capabilitiesSmall volume shipments
Motor Carriers Most flexibleFairly fastFairly reliable
Fairly costlySize & weight restrictedWeather sensitive
Pipelines Very reliableHigh capacityLow costFrequent departures
Very slowLow capabilityLow flexibility
Railroads High capabilityHigh flexibilityLow cost
Low reliabilitySometimes slow
Water Carriers High capabilityHigh capacityLow cost
SlowLow flexibilityLow reliability
Transportation Continued
• Intermodal transportation
Using more than one mode of transportationPiggybackContainer On FlatCar
(COFC)Roll-On-Roll-Off (RO-
RO)
Technology
• Technological innovations have impacted:
Speed Flexibility Reliability
in the distribution industry.
Technology continued
• Three key elements of distribution systemsElectronic Data Interchange (EDI)- large
quantities of data sent electronically Bar Code Systems – each product item distinct
identity Distribution Centers – faster and frequent turn
over rate
Technology continued• E-Commerce (EC)• Definition: Buying and selling goods and services
over the Internet. • Categories of EC
Technology continued
• Methods of fulfilling EC orders
Technology continued
• Benefits of EC Companies and publishers have a global presence, and the customer has global
choices and easy access to information.
Companies can improve competitiveness and quality of service by allowing access to their services anyplace, anytime. Companies can also monitor customers’ choices and requests electronically.
Supply chain response times are shortened.
Firms can substantially reduce transaction costs, which allows for price reductions or cost savings. Companies that provide purchasing and support services through the Web can save significant personnel costs.
EC levels the playing field for small companies that cannot afford the same infrastructure and marketing programs as their larger counterparts.
Case Analysis – Amazon. COM
• Amazon. COMDistribution offers traditional retailers a cost
advantageShipping costs on a per unit basis are much
higher for an Internet firm that ships individual orders directly to consumers
Traditional Systems Internet SystemsCentral Warehouses
Distribution Centers
Retail Outlets
Customers
Case Analysis – Amazon. COM
• Time Reduce Lead Time Quick and efficient consumer response
• Dependability Safe delivery, safe purchase
• Communication 2 way link between Amazon and its customers Forecast customer needs
• Convenience Minimize searching effort for buyer with technology
Case Analysis – Amazon. COM • Technology: Amazon. COM uses software to more
accurately forecast purchasing patterns by region, allowing it to give suppliers better information about delivery dates and volumes.
• Third Party Providers: Amazon. COM uses third-party logistics providers to transport the orders directly to their customers; they often send packages via Mail, UPS, FedEx, and Airborne Express.
• Transportation Time: 99% of the orders were shipped and delivered on time.
• Inventory Management: Seven huge distribution centers, keep inventory of more than 2.7 million products - key differences between Amazon. COM and its competitor.
Supply Chain Management (SCM)
• SCM is the Distribution Centre for Wal-Mart
• Located in Calgary, AB
• Centre is just under 1 000 000 square feet
• Ships to many Wal-Mart stores across western Canada
SCM continued
• Step up from JIT system
• Focuses on:Cross-dockingPick-to-lightPut-to-light
Role of States
• RegulationTransportation & CommunicationsRetailing
• Regulatory framework Control over own National spaceSafety & Efficiency
Role of State continued
• Deregulation
• Air transportation industry
• Two examples:US vs. UKUS vs. Hong Kong
Transnational Retailing
• Retailing is the final link in the production chain.
• Retailing has always had a predominantly domestic orientation.
• Some of the world’s largest retailers in terms of sales revenues continue to be entirely embedded in their domestic market.
Transnational Retailing
• Two dimensions to the transnational operations of retailing firms
• Selling VS. Sourcing
Transnational Retailing
• Motivations for Transnationalization of a Retail Firm’s Operation: Saturation of the domestic market Intensification of competition in the domestic market Regulatory constraints in the domestic market Perception of profitable opportunities overseas Desire to exploit a firm’s specific advantages in new markets
• Ways for retailers to Enter a Foreign Market: Build a new store Merge with or to acquire an existing firm in the target market Enter into a collaboration with a domestic firm within the target
market through licensing and franchising
Transnational Retailing
• In 1999, only four retail firms were among the world’s top 100 transnational corporations.
• In terms of TNI:
Rank TNI Company Country
53 52.7 Royal Ahold Holland
76 36.4 Metro Germany
90 25.8 Wal-Mart U.S
Transnational Retailing
Pop Quiz • What are the seven “R”s for Logistics? Right product, Right quantity, Right condition, Right place, Right time,
Right cost, Right customers. • What are the five modes of transportation?
Airline, motor carrier, pipeline, railroad, water carrier.
• What are the two barriers in the distribution industry? Physical barrier, political barrier.
• What are the ways for retailers to enter a foreign market? (Name 2 out of 3)Build a new storeMerge with or to acquire an existing firm in the target marketEnter into a collaboration with a domestic firm within the target market
through licensing and franchising
Pop Quiz
• What are the differences between pick-to-light and put-to-light?Put to light: emptying the boxPick to light: filling the box
• Name 2 out of the 4 types of logistics service firmsTraditional transportation, asset based, skill based, and network logistics provider
• In what ways has technology impacted the distribution industry?Speed, reliability, flexibility.
Sources
• Dicken, Peter. Global Shift. Fourth edition. The Guilford Press
• Bloomberg, David. Stephen, Lemay. Joe B. Hanna. Logistics. Prentice Hall.
