NETWORK DESIGN1.ppt

8/10/2019 NETWORK DESIGN1.ppt

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2007 Pearson Education 4-1

Distribution Network/Channel

Design


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2007 Pearson Education

Channel sales

Industry Telecom

Markets Wireless, Cable, Tel.

Companies C1, C2.Cn

Geography 6 Region

Challengemultiple market, multiple Cos. Multiple

region

How u get your product in the market?

How you penetrate in the market ?

4-2


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What is Channel Management ?

The design, development and

evaluation of product flow system to

enhance customer value througheffective customer acquisition,

retention and development

Single channel management

MCM


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What MCM Include In Distribution

Framework ?

Store

Web

Catalog Sales force

Third party agency

Call centre etc


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Customer Management Framework

through Multiple channels

4-5

Analyze

Customer

Develop

Multichann

el Strategy

Design

ChannelsImplement Evaluate

Develop

appropriate

customer

segmentation

for

multichannel

strategy andDesign

1.Efficiency,

Segmentation,

or customer

satisfaction

2. Asses

competition

1. Which

channelemployed

2. What

should be the

function of

each channel

3. Should

customer be

right

channeled

MarketingProgram

Organizationa

l coordination

Marketing

mix

coordination

Single view ofcustomer

Channel

accounting


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Key Issues in Multichannel Customer

Management Framework

1. Analyze Customer

Segments formed on the basis of channel usage

Different channels most likely have different needs

(e.g. convenience vs. services )

Channel segments are actionable and marketers can

design marketing program by channel

Channel-based segments are substantial as long aseach channel attracts a significant customer base

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Lesson: This is all about customer segmentation on

the basis of channel usage (traditional view)


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Analyze customer

Preferences

Responsiveness

Growth potential

4-7

Lesson: This is all about customer segmentation on

the basis of channel development (modern view)



2. Developing multichannel

strategy

Three potential vision driving multichannel strategy

Efficiency

Customer satisfaction

Segmentation

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Developing multichannel strategy-Factors Influencing Channel Efficiency

Channel Efforts as cost reduction

Inventories (higher the number of facilities in a supply chain the

inventory cost increases )

Transportation (increasing the number of facilities decreases the

total transportation cost ) Facilities and handling (Facility costs decreases as the number of

facilities is reduced )

Information (longer the channel higher the information cost)



Developing multichannel strategy-Factors Influencing customer satisfaction

Elements of customer service influenced by channel design :

Response time

Product variety

Product availability

Customer experience

Order visibility

Return ability



Service and Number of Facilities

Number of

Facilities

Response Time



Developing multichannel strategy-Factors influencing Customer segmentation

Multichannel as a device for segmenting the market

Both for current customer base and new customers

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Assignment

Explain the following

Number of facilities vs. Product Variety

Number of Facilities vs. Product availabilityNumber of Facilities vs. Customer experience

Number of facilities vs. Order visibility

Number of facilities vs. Return ability



Outline

The Role of Distribution Channel in the Supply

Chain

Factors Influencing Distribution Network Design

Design Options for a Distribution Network

E-Business and the Distribution Network

Distribution Networks in Practice

Summary of Learning Objectives



The Role of Distribution

in the Supply Chain

Distribution: the steps taken to move and store a

product from the supplier stage to the customer stage

in a supply chain

Distribution directly affects cost and the customerexperience and therefore drives profitability

Choice of distribution network can achieve supply

chain objectives from low cost to high responsiveness

Examples: Dell distribute PCs directly to end

consumers whereas HP distributes through reseller

P & G distributes through supermarkets as well as

through distributors for small buyers



Factors Influencing

Distribution Network Design

Distribution network performance evaluated along

two dimensions at the highest level:

Customer needs that are met

Cost of meeting customer needs

Distribution network design options must therefore be

compared according to their impact on customer

service and the cost to provide this level of service



Factors Influencing


Elements of customer service influenced by network structure:

Response time

Product variety


Customer experience

Order visibility

Return ability


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Factors Influencing


Elements of costs affected by network structure:

Inventories (higher the number of facilities in a supply chain the

inventory cost increases )

Transportation (increasing the number of facilities decreases the

total transportation cost ) Facilities and handling (Facility costs decreases as the number of

facilities is reduced )

Information (longer the distribution channel higher the

information cost)


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Service and Number of Facilities

Number of

Facilities

Response Time


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Design Options for a

Distribution Network

Manufacturer Storage with Direct Shipping

Manufacturer Storage with Direct Shipping and In-

Transit Merge

Distributor Storage with Carrier Delivery

Distributor Storage with Last Mile Delivery

Manufacturer or Distributor Storage with Consumer

PickupRetail Storage with Consumer Pickup

Selecting a Distribution Network Design


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Manufacturer Storage with

Direct Shipping

Manufacturer

Retailer

Customers

Product Flow

Information Flow


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Performance Characteristics of

Manufacturer storage with DSN

Cost Factor PerformanceInventory ?

Transportation ?

Facilities and Handling ?

Information ?

Service Factor Performance

Response Time

Product Variety


Customer experience

Order Visibility

Return ability


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In-Transit Merge Network

Factories

Retailer

Product Flow

Information Flow

I n-Transit M erge byCarrier

Customers


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In-Transit Merge


Transportation ?


Information ?


Response Time ?

Product Variety ?

Product availability ?

Customer experience ?

Order Visibility ?

Return ability ?


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Distributor Storage with

Carrier Delivery

Factories

Customers

Product Flow

Information Flow

Warehouse Storage by

Distributor/Retailer


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Distribution storage with carrier Delivery


Transportation ?


Information ?


Response Time ?

Product Variety ?



Order Visibility ?

Return ability ?


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Distributor Storage with

Last Mile Delivery

Factories

Customers

Product Flow

Information Flow

Distributor/Retailer

Warehouse


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Last Mile Delivery


Transportation ?


Information ?


Response Time ?

Product Variety ?



Order Visibility ?

Return ability ?


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Manufacturer or Distributor Storage

with Customer Pickup

Factories

Retailer

Pickup Sites

Product FlowInformation Flow

Cross Dock DC

Customer Flow

Customers


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Distribution Networks in Practice

The ownership structure of the distribution network

can have as big as an impact as the type of distribution

network

The choice of a distribution network has very long-term consequences

Consider whether an exclusive distribution strategy is

advantageous

Product, price, commoditization, and criticality have

an impact on the type of distribution system preferred

by customers


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Summary of Learning Objectives

What are the key factors to be considered when

designing the distribution network?

What are the strengths and weaknesses of various

distribution options?What roles do distributors play in the supply chain?

NETWORK DESIGN1.ppt

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