The document discusses various distribution strategies and concepts including cross docking, milk runs, direct shipping, hub and spoke models, and pool distribution. It provides details on how each strategy works, benefits and challenges. It also includes examples of companies like FedEx and Sulzer that utilize different distribution approaches in their supply chains. Key distribution methods covered are moving goods directly from receiving to shipping docks to reduce handling (cross docking), routing trucks on fixed routes between suppliers and retailers (milk runs), and shipping direct from suppliers to stores without warehouses (direct shipping).
2. Distribution Management
• Distribution can be defined as –the channel structure
used to transfer products from an organization to its
customer
• Getting the right product to the right place at the right
time.
• Distribution decision has significant implication on:
1. Product margins and profits
2. Marketing Budgets
3. Final retail pricing
4. Sales management practices.
3. Distribution Strategies
• Cross Docking
• Milk Runs
• Direct Shipping
• Hub and spoke Model
• Pool Distribution
4. FedEx
• FedEx Supply Chain provides centralized, multi-client global
distribution centers with scalable warehouse and order
management capabilities.
• When integrated into customer operations, FedEx Critical
Inventory Logistics and Fulfillment Services execute as a
seamless extension of business, providing late order cut-off
times that extend customer's
service day and an end-to-end supply chain designed to meet
your specific needs.
5. Cross Docking
• Cross docking is the movement of materials from the
receiving docks directly to the shipping dock
• Goods do not need to be placed in storage, creating
a significant cost savings in inventory and material
handling
• Reduces direct cost associated with excess inventory
• Reduces product damages and product obsolescence
6. Cross Docking
• Two basic form of Cross Docking
1. Basic cross dock:
The packages are moved directly from the arriving vehicles to the
departing ones.
This form of cross docking does not need a warehouse and a
simple transfer point is enough.
2. Flow Through cross Dock.
When material arrive and they are in large packages , these
packages are opened and broken into smaller quantities , sorted
consolidated to deliver them to different customer and
transferred to vehicles
8. Cross Docking
• Benefits of cross docking
1. Helps to improve the speed of flow of the products
2. Reduce cost
a) Labour is removed from the job of storage
b)helps to eliminate the two most expensive
distribution operations.
3. Helps to reduce the amount of finished goods inventory
that is required to be maintained as safety stock
9. Cross Docking
Constraints
• Cross docking requires a strong IT base and real time
information sharing facilities
• Is appropriate for appropriate for products with large
predictable demands
• Requires a great degree of coordination and synchronization
between the incoming and outgoing shipments which ,in turn
relies on better information and planning
•
10. Milk Run
• A milk run is a route in which a truck either delivers product
from a single suppliers to multiple retailers
• Multiple suppliers to single retailers.
11. Milk Run
Retail Store
Retail Store
Supplier
Retail Store
Retail Store
Retail Store
Milk Run From single supplier to multiple retailers Retail Store
12. Milk Run
Retail Store
Retail Store
Supplier
Retail Store
Retail Store
Supplier
Retail Store
Retail Store
13. Milk Run
• Benefits of Milk runs
1. Reduces cost
2. Proximity to suppliers
3. Reduces inventory
14. Direct Shipping
• Method of distribution in which goods come
directly from suppliers to retail stores.
• The routing of each shipment & manager only
need to decide on quantity to ship & mode of
transportation to use.
• It eliminates need of intermediate facilities
e.g. warehouses & distribution centres.
15. Direct Shipping
Supplier 1 Retail Store
Retail Store
Supplier 2
Retail Store
Retail Store
Retail Store
Retail Store
17. Direct Shipping
Challenges
• Large retail stores : It is justified if the retail stores are large
enough. With small size of retail stores cost increases.
• Higher costs : Due to system of direct distribution the costs of
transporting the goods may be higher than other systems of
distribution.
19. Hub & Spoke Model
• H&S network involves a series of nodes
(hubs), connected by arcs (spokes) that
represent viable transportation alternatives
between two nodes.
20. Hub & Spoke Model
• Companies centralize large distribution
centers which essentially do three things
– receive goods/information coming from many
suppliers
– consolidate goods/information according to the
location where they are to be shipped
– ship them individually to their final destination.
21. Processes that use Hub and Spoke
• Manufactured goods:
– e.g. Retail
• Services:
– e.g. Airlines,Cargo Airlines
22. How it Works
• Pure Hub and Spoke vs. Hybrid Hub and Spoke
E.g. Parcel or shipping industries E.g. Airline industry
23. Hub and Spoke vs. Point to Point
•One model consists of centralized transportation while the other
model consists of many routes that are decentralized
• Hub and spoke design simplifies the network of routes
Point to point H&S
No of routes 32 16
cost 10000 10000
Total Cost 320000 160000
Save 160000
24. Benefits
• Having a hub and spoke can decrease the
complexity of distribution.
• Transportation cost reduced
• There is less time spent in transport which directly reduces
the cost of the activity
• Management costs
• Management specialists generally focus on one location
for distribution logistics
25. Benefits
• Economies of scale
– By having larger loads, you take advantage of
lower per unit costs
• Proximity to customer.
-- Goal being to supply to a maximum
amount of customers in a minimum amount
of time.
26. Drawbacks
• Disruption at the hub
• Bound by hub capacity
• Cargo must pass through the hub before reaching
its destination, results in longer journey.
• Inflexible, changes at the hub, or even in a single
route affects the whole network.
27. Pool Distribution
• Pool distribution is the distribution of orders to numerous
destination points within a particular geographic region.
• Characteristics include a high frequency of regular shipments
in LTL quantities, typically in the 150 to 10,000 pound range.
28. Pool Distribution
• Instead of shipping direct from origin shipper to consignee,
orders are shipped on consolidated trailers direct to regional
terminals.
• There, the pool is offloaded,
segregated and sorted by consignee,
then reloaded onto local delivery
trucks for delivery to the ultimate
destinations.
29. Benefits
• When manufactures have multiple shipments bound for a
specific region, it is simple, cost effective alternative to LTL.
• Speed merchandise to retail outlets.
• Meet customer delivery requirements.
• Reduce delivery cost to customers.
30. SULZER CORPORATION
• Sulzer ltd. Is a Swiss industrial engineering and manufacturing firm
• Founded by Salomon sulzer-bernet in 1775 and established as sulzer
brothers ltd. In 1834 in Switzerland.
• Sulzer pumps - pumping systems (it produces centrifugal pumps
and mixers for the oil, hydrocarbon and fertilizer industries at a
global scale)
• Sulzer metro - turbine & transmission components
• Sulzer chemtech - components and services for separation
columns and static mixing
• Sulzer turbo services - manufactures spares for turbines and
rotating electrical equipment.
31. VISION AND VALUES
• Vision
Our customers recognize us for our leading technologies and services,
delivering innovative and sustainable solutions.
• Strategic priorities
– Technology leadership
– Outstanding services
– Continuous operational improvements
– Cross-divisional cooperation
• Values
– Customer partnership
– Committed people
32. PRODUCTS
Agitators Mixers and Process Technology
Dispensers Pumps and Systems
Auto, Aero and Turbine Pumps Services
Components Testing and Production
Coating Equipment Services
Coating Materials Separation Technology
Coating Services Tower Field Services
Electro-Mechanical Services Turbo machinery Services
Mining Equipment General Mechanical Services
33. CASE STUDY
• First plant in India – Kondhapuri (Pune)
• First weaving machine – 1953 (TW11)
• Prime objective to add local value addition to existing range
products
• Sulzer sold its machine
Raymond (1963)
Dig jam (1965)
Bombay dyeing (1968)
• Recent net profit – 7.08 crore
36. BENEFITS OF EDOSnet
• Continuous supervision
• Services open for 24hours
• Track the status of the consignment
• Continuous updating of data
• Communication cost reduction
• Multi-lingual
• Number of queries reduction
37. DISTRIBUTION NETWORK
• Invested 50-60 crore on distribution system
• Storage- 23 million spare part
• Storage consist of various sections and sections has been divided into 8
rack
• Mainframe developed between 2 racks
• Use of robot for picking the material
• Conveyor belt with sensors
• Main distributors- DHL, FedEx, Panel pina
38. DISTRIBUTION NETWORK
Courier service
– Though the cost associated with this distribution system are high, the
customer gets the delivery of the goods at the doorstep.
– This system of distribution is especially useful when the spare parts
are urgently required as the production has stopped due to the
failure of a particular part.
Air freight service
– Cheaper system as custom clearance is handled by customer itself
– It provide faster service in comparison with other modes of
transportation
