Presentation on theme: "Distribution. Functions and forms."— Presentation transcript:
1Distribution. Functions and forms. Distribution channels and distribution enterprises.
2DEFINITIONDISTRIBUTION 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)
3It 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).
4DISTRIBUTION is „filling the gaps„ (M. Christopher)TIME GAPSPACE GAPQUANTITY GAPASSORTMENT GAPINFORMATION GAP
5DISTRIBUTION FUNCTIONS: BEFORE TRANSACTIONfilling 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)TRANSACTIONALconnected 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 TRANSACTIONinclude:service (important for customers): providing spare parts etc.data processing (important for distribution system)
7DISTRIBUTION FORMS(products allocation on the market)Exclusive distributionThe number of products available is limited, they are available only in predefined locations.Selective distributionThe number of products available is NOT limited, HOWEVER they are available only in predefined locations.Intensive distributionProducts are available everywhere
8What determines distribution form? - producer- product- law regulations
9DEFINITION: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)
10CHANNELS OF DISTRIBUTION integrate : Flow of products (material products or services)Flow of value (money)Flow of information:controlling products movements,coming from customers/ final userscoming from suppliers
11Key words/ issues:Distribution definition.Gaps to fillDistribution functionsDistribution formsChannel of distribution definition
12Case study You owe a school. What are the distribution functions of your company:Before transaction,Transactional,After transaction?Identify the gaps they are filling in.
13QUESTIONS Service level – what is it? Relation between service level and logistics?How to measure service level?Can we accept <100%?
14Customer service level 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.
15Customer service level 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.
16CALCULATIONS 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)
18PROCEDURE Identify expected number of orders not picked complete (N) Calculate the demand per yearIdentify the supply lot (D)Calculate the number of suppliesCalculate the number of orders not to be picked completeCalculate the number of orders not to be picked complete per supplyCalculate standard deviationCalculate standardized number of orders not picked completeIdentify and interprete customer service level
19EXAMPLEThe 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?
20Another set of data:N = 1%Demand per week = 5000Deviation = 1500Number of supplies = 10Delivery cycle = 1Deviation = 0To calculate:Service levelThe number of orders not to be picked complete