Direct delivery

From CEOpedia | Management online

Direct delivery is way of transporting the goods when they are shipped directly from the supplier to the customer so that warehouse of seller is avoided[1]. Number of direct deliveries are growing as the consequence of increasing the direct marketing solutions, mainly by electronic media so that conventional sales model and retail channels have changed[2].

Why direct deliveries

The main assumption of direct delivery is that in the less points of supply chain product is processed, the less cost it generates. Direct deliveries might be done without touching any National Distribution Centers (NDCs), Regional Distribution Centers (RDCs), European Distrivution Centers (EDCs) or any combination of these Distribution Centers. Direct delivery is ofter caused by redesigning supply chain management. Moreover, adventages are[3][4][5][6][7]:

  • responding to needs of different customers,
  • meeting requirements of product service level,
  • simplifying coordination,
  • saving time,
  • savnig expenses from transportation,
  • minimalising quantity of stocks (and costs pararelly).

Challenges of direct deliveries

There might appear some disadventages such as no full trucks loading or many links between many warehouses from suppliers to many final destinations and back. To prevent that consolidation centers (hubs) or cross-docking might be used but here previous adventage of simplified coordination starts to be more complex again. From transporting point of view, lines of transport shoud be kept as short as possible and both ways the same so that geographical zone are divided and transport is optimased. If this is not balanced, the costs are increasing. In general, there should be considered below aspects when it comes to direct deliveries efficiency[8][9][10][11][12]:

Examples of Direct delivery

  • In the context of e-commerce, direct delivery can refer to the process of shipping goods directly from the manufacturer or supplier to the consumer, bypassing the seller’s warehouse. For example, a consumer may order a product from an online retailer, and the product is shipped directly from a supplier to the consumer.
  • In the context of physical retail, direct delivery can refer to the process of shipping goods directly from a supplier to the store, bypassing the seller’s warehouse. For example, a retailer may order a product from a supplier, and the product is shipped directly from the supplier to the store.
  • In the context of logistics, direct delivery can refer to the process of shipping goods directly from a manufacturer or supplier to a customer, bypassing the seller’s warehouse. For example, a company may order a product from a supplier, and the product is shipped directly from the supplier to the customer.

Advantages of Direct delivery

Direct delivery has many advantages for the customer. These include:

  • Reduced costs - As the goods are delivered directly to the customer, there is no need for the seller to store the goods in a warehouse, thus reducing the overall cost of the product.
  • Enhanced customer service - By shipping the goods directly to the customer, the customer can receive their goods faster and more efficiently than if they were to wait for the seller to ship them from a warehouse.
  • Increased accuracy - Direct delivery reduces the chance of orders being misrouted, misplaced, or forgotten, as there is no middle man involved in the delivery process.
  • Improved product quality - Goods can be delivered to the customer fresh and with minimal damage, as there is no need for the goods to be stored in a warehouse.
  • Reduced environmental impact - By avoiding the need for a warehouse, direct delivery helps reduce the environmental impact of shipping goods, as fewer vehicles are used to transport the goods.

Limitations of Direct delivery

Direct delivery has its limitations. These include:

  • High cost: Direct delivery is often more expensive than regular shipping, due to the lack of economies of scale and additional logistics involved.
  • Limited inventory: Direct delivery limits the number of products a supplier can offer due to the lack of a warehouse and inventory management system.
  • Time constraints: Direct delivery can take longer to complete than regular shipping, due to the need for multiple steps and additional logistics.
  • Limited geographic coverage: Direct delivery is often limited to a specific geographic area, due to the need for local logistics and infrastructure.
  • Poor customer service: Without a warehouse, direct delivery can often result in poor customer service, as it can be difficult to fill orders quickly and accurately.

Other approaches related to Direct delivery

Direct delivery is a method of shipping goods from the supplier to the customer with no intermediary. Other approaches related to direct delivery include:

  • Drop Shipping - This is a process where the supplier ships the goods directly to the customer on behalf of the seller. In this case, the seller does not store or handle the goods.
  • Just-in-time (JIT) Delivery - This is a process that involves scheduling and delivering the goods to the customer at the exact time of need. This helps reduce the cost of warehousing and inventory management.
  • Vendor-Managed Inventory (VMI) - This is a process where the supplier is given access to the customer’s inventory and is responsible for managing and replenishing it according to the customer’s needs.
  • Point-of-Use Delivery - This is a process where the goods are delivered to the customer’s location, such as a store, office, or factory, at the exact time of need.

In summary, direct delivery is a method of shipping goods from the supplier to the customer without any intermediary. Other related approaches include drop shipping, just-in-time delivery, vendor-managed inventory, and point-of-use delivery.

Footnotes

  1. ↑ Luszczak A., (2010), p.187
  2. ↑ OECD, (2009), p.31
  3. ↑ Notteboom T., Chen L. (2012), p.5
  4. ↑ Luszczak A., (2010), p.187
  5. ↑ Ballebye O. H., Möller B. A., Wahl J., Jensen K., Nygård A., Basalisco B. (2016), p.34
  6. ↑ O’Byrne R. (2011), p.51
  7. ↑ Zijm H., Klumpp M., Regattieri A., Heragu S. (2018), p. 234-237
  8. ↑ Notteboom T., Chen L. (2012), p.5
  9. ↑ Luszczak A., (2010), p.187
  10. ↑ Ballebye O. H., Möller B. A., Wahl J., Jensen K., Nygård A., Basalisco B. (2016), p.34
  11. ↑ O’Byrne R. (2011), p.51
  12. ↑ Zijm H., Klumpp M., Regattieri A., Heragu S. (2018), p. 234-237


Direct delivery — recommended articles
Inventory in transit — Outbound logistics — Distribution logistics subsystem — Regional distribution centre — Channel width — Transit shipment — Contract logistics — Optimization of transport — Logistics chain

References

Author: Weronika Burzawa

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