Distribution Network
Also known as: Distribution System, Logistics Network, Supply Network
Definition
A distribution network is the infrastructure and system that moves products from origin to destination. It includes warehouses, transportation modes, fulfillment processes, and the technology that coordinates them all.
Network Components
Facilities
- Manufacturing plants - Where products are made
- Distribution centers - Regional inventory hubs
- Fulfillment centers - Order processing facilities
- Cross-dock facilities - Transfer points
- Retail stores - Final stocking points
Transportation
- Inbound freight (suppliers to DCs)
- Transfer between facilities
- Outbound to customers
- Returns flow
Technology
- Warehouse management systems
- Transportation management systems
- Order management systems
- Visibility platforms
Network Design Considerations
| Factor | Impact |
|---|---|
| Customer location | Determines facility placement |
| Service expectations | Affects number of facilities |
| Product characteristics | Influences handling needs |
| Volume | Drives capacity requirements |
| Cost | Balances service and efficiency |
Network Models
Centralized
- Single or few large facilities
- Lower facility costs
- Higher transportation costs
- Longer delivery times
Decentralized
- Many regional facilities
- Higher facility costs
- Lower transportation costs
- Faster delivery times
Hybrid
- Mix of central and regional facilities
- Fast movers distributed
- Slow movers centralized
- Balances cost and speed
Network Optimization
Questions to answer:
- How many facilities do we need?
- Where should they be located?
- What should each facility stock?
- How should orders be routed?
- What transportation modes to use?
Key Metrics
- Delivery speed (days to customer)
- Fill rate (% of orders shipped complete)
- Cost per order
- Inventory investment
- Total network cost
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