Abstract
Distribution consists of moving and storing a product from the supplier to customer during the supply chain process. Distribution process is crucial decision of a company due to its effects on supply chain cost and customer satisfaction. In the competitive environment of the business, all companies aim to minimize delivery costs and maximize customer satisfaction by applying optimum distribution network design. The design of effective distribution network requires critical decisions as the location and the capacity of distribution centers together with logistic activities, which consist of transportation and inventory process. The purpose of this research is to define a deep literature review regarding definition of distribution network, distribution channels, selection of distribution, and the factors affecting distribution network design. After reviewing a comprehensive literature on distribution network design, this chapter includes suggestions.
TopBackground
Supply chain management, which has been attractive for both practitioners and academicians in the recent years, is the key driver of logistics. It can be defined as the management of relations between firms and interdependent organizations or business units. These business units can be summarized as purchasing, logistics, material suppliers, marketing and production facilities (Yatsyshina, 2016). One of the vital parts of supply chain is distribution. Distribution is related with moving and storing a product in the supply chain from supplier to customer. It can be realized in every stages of the supply chain and it is crucial for influencing customer value and supply chain cost (Chopra, Meindl, 2006).
On the other hand, network of storage facilities, arrangement of people and transportation system is related with distribution network and main goal of this process is delivering final products to the customers. Distribution network design determines structure of distribution network as location, type, size and number of echelons in supply chain. The primary objective of this activity is to optimize flow of products from production points to the demand points. In this way, distribution network design has significant influence on performance of supply chain by affecting consumers’ service levels and costs. Because of this, a successful distribution network design contributes high service levels together with decreasing logistics costs. To this respect, distribution network design includes optimization of goods’ flow and improvement of existing network (Yatsyshina, 2016).
Key Terms in this Chapter
Transshipment: The transfer of products from one carrier to another.
Heuristic: The mental process that enables people to solve problems by experimental methods.
Deployment: The process of allocating resources for effective action.
Retail: The activity of selling products usually in small quantities.
Handling: The process of packaging, and movement of materials or goods to the customers.
Inventory: A detailed catalog or list of goods, properties or qualities.
Echelon: A level that someone or something has attained in a society, a profession or an organization.
Node: A central or connection point in a network system.
Cycle Time: The total process time from beginning to the end in order to complete a cycle of the operation.
Warehouse: A planned space, structure, building or room used for storing manufactured goods.
Supply Chain: The channel of distribution that enables products to be delivered from the supplier to the final buyer.