Distribution. Functions and forms. Distribution channels and distribution

enterprises.

DEFINITIONDISTRIBUTION the activities associated with the movement of material, usually finished products or service parts, from the manufacturer to the customer. These activities encompasss the functions of transportation, warehousing, inventory control, material handling order administration, site and location analysis, industrial packaging, data processing and the communications network necessary for effective management. (APICS dictionary)

It includes all activities related to physical distribution, as well as the return of goods to the manufacturer. In many cases, this movement is made through one or more levels of field warehouses (syn: physical distribution).

DISTRIBUTION is „filling the gaps„ (M. Christopher)

TIME GAP

SPACE GAP

QUANTITY GAP

ASSORTMENT GAP

INFORMATION GAP

DISTRIBUTION FUNCTIONS:BEFORE TRANSACTION filling the information gap (providing information concerning product), the space gap (moving products from place they were manufactured to place they are to be sold) and time gap (making products available when they are needed/ requested)

TRANSACTIONAL connected with trade activities (not connected with logistics) and filling the quantity gap (the difference between how much/ many customers buy and how much/ many manufacturers provide) and the assortment gap (the difference between what one customer buys and manufacturer sells)

AFTER TRANSACTION include: service (important for customers): providing spare parts etc. data processing (important for distribution system)

Before transaction

transaction

After transaction

productsinformation

customer

DISTRIBUTION FORMS(products allocation on the market)

Exclusive distribution The number of products available is limited, they are available only in predefined locations.

Selective distribution The number of products available is NOT limited, HOWEVER they are available only in predefined locations.

Intensive distributionProducts are available everywhere

What determines distribution form?

- producer- product- law regulations

DEFINITION:

Channels of distribution: any series of firms or individuals that participates in the flow of goods and services from the raw material supplier or producer to the final user or consumer

(APICS dictionary)

CHANNELS OF DISTRIBUTION integrate :

Flow of products (material products or services)

Flow of value (money)

Flow of information: -controlling products movements,-coming from customers/ final users-coming from suppliers

Key words/ issues:1) Distribution definition.2) Gaps to fill3) Distribution functions4) Distribution forms5) Channel of distribution definition

You owe a school.What are the distribution functions of your

company: Before transaction, Transactional, After transaction?Identify the gaps they are filling in.

Service level – what is it? Relation between service level and

logistics? How to measure service level? Can we accept <100%?

A desired measure (usually expressed as percentage) of satysfying demand through inventory or by the current production schedule in time to satisfy the customers’ requested delivery dates and quantities.

In make-to-stock environment, level of service is sometimes calculated as the percentage of orders picked complete from stock upon receipt of the customer order, the percentage of line items picked complete or the percentage of total dollar demand picked complete.

In make-to-order and design-to-order environment, level of service is the percentage of time that the customer-requested or acknowledged date was met by shipping complete product quantities.

FORMULAS: Demand per year (PR) Number of supplies (ld) Total number of orders not picked

complete (per year) (NB) Number of orders not picked complete per

supply (nb) Standard deviation (1) Standardized number of orders not picked

complete (2)

(1)

(2)

222 PT TPPT

PTnb /

1. Identify expected number of orders not picked complete (N)

2. Calculate the demand per year3. Identify the supply lot (D)4. Calculate the number of supplies5. Calculate the number of orders not to be picked

complete6. Calculate the number of orders not to be picked

complete per supply7. Calculate standard deviation8. Calculate standardized number of orders not

picked complete 9. Identify and interprete customer service level

The company analyzed sells butter.The demand per week is on average 1460,

but the deviation is 480. The delivery is 6300 and the delivery cycle is 3 weeks but the deviation is 1 week.

The strategy of the company allows for 2% of demands not picked complete.

What is the risk (for customer) of not being served?

Another set of data: N = 1% Demand per week = 5000 Deviation = 1500 Number of supplies = 10 Delivery cycle = 1 Deviation = 0To calculate: Service level The number of orders not to be picked complete