Distribution network

A distribution network is a system for delivering goods, services and information from a point of origin to a point of consumption. It is typically composed of a variety of interconnected elements, each of which plays a different role in ensuring the smooth operation of the network. These elements include suppliers, distributors, warehouses, retailers, and customers.

The main objective of a distribution network is to get the goods and services from the point of origin to the point of consumption in the most efficient, cost-effective, and timely manner. To achieve this goal, distribution networks must be designed to take into account the needs of the customers, the capabilities of the suppliers, the availability of the goods and services, and the infrastructure of the network.

In summary, a distribution network is a system for delivering goods, services and information from a point of origin to a point of consumption. It is composed of a variety of interconnected elements, including suppliers, distributors, warehouses, retailers, and customers. The main objective of a distribution network is to get the goods and services to the point of consumption in the most efficient, cost-effective, and timely manner.

Example of Distribution network

The main components of a distribution network are:

• Suppliers: The suppliers are the companies or individuals who provide the goods or services that are to be distributed. They are responsible for ensuring that the goods or services are of good quality and are delivered on time.
• Distributors: Distributors are responsible for making the goods or services available to the customers at the right place and time. They take the goods or services from the suppliers and deliver them to the retailers or warehouses.
• Warehouses: Warehouses are used to store the goods or services for a period of time before they are shipped to the customers.
• Retailers: Retailers are the companies or individuals who sell the goods or services to the customers. They are responsible for marketing the goods or services and providing customer service.
• Customers: Customers are the end users of the goods or services. They are responsible for making the final purchase and using the goods or services.

When to use Distribution network

Distribution networks are used when goods or services have to be delivered to a large number of customers in a geographically dispersed area. They are also used when the customers have specific needs and requirements that have to be met, such as timely delivery, quality products, and customer service. Distribution networks can also be used when the goods or services are of a highly specialized nature, such as medical supplies or pharmaceuticals, and when the goods or services are perishable, such as food and beverages.

Types of Distribution network

There are two main types of distribution networks: direct and indirect.

• Direct Distribution: Direct distribution is a method of distribution where the supplier delivers the goods or services directly to the customer without any intermediaries. This method is often used for high-value goods or services that require special handling.
• Indirect Distribution: Indirect distribution is a method of distribution where the supplier uses intermediaries such as distributors, wholesalers, or retailers to deliver the goods or services to the customers. This method is often used for low-value goods or services that do not require special handling.

Steps of Distribution network

The steps of distribution network involve the following:

• Planning: The first step of a distribution network is planning. This involves determining the needs of the customers, the capabilities of the suppliers, the availability of the goods and services, and the infrastructure of the network.
• Sourcing: Sourcing involves finding the right suppliers to provide the goods and services. This involves researching the suppliers, negotiating contracts, and ensuring that the goods and services are of good quality.
• Delivery: Delivery is the process of moving the goods and services from the suppliers to the customers. This involves selecting the right delivery method, ensuring the goods and services are delivered on time, and tracking the delivery.
• Customer Service: Customer service is the process of providing support and assistance to the customers. This includes answering questions, resolving issues, and providing feedback.

Advantages of Distribution network

• Fast and efficient delivery: One of the main advantages of a distribution network is that it allows for fast and efficient delivery of goods and services to customers. This is because the network is designed to take advantage of the infrastructure available in each area. For example, a distributor may be located in a location that has access to roads, railways, and airports, which allows for faster delivery of goods and services.
• Increased customer satisfaction: Another advantage of a distribution network is that it increases customer satisfaction. By providing customers with the goods and services they need when they need them, customers are more likely to be satisfied with their purchases.
• Lower costs: A distribution network also helps to reduce costs for businesses. By taking advantage of the infrastructure available in each area, businesses are able to reduce their transportation and warehousing costs.

Limitations of Distribution network

The distribution network is not without its limitations. One of the main limitations is that the distribution network is only as good as the infrastructure that supports it. If the infrastructure is not adequate, then the goods and services may not be delivered in a timely or cost-effective manner. Additionally, the distribution network is affected by external factors such as economic conditions, political uncertainty, and natural disasters. These external factors can cause delays and disruptions in the delivery of goods and services. Lastly, the distribution network is limited by the capacity of the suppliers, distributors, warehouses, and retailers to supply and deliver the goods and services.

Other approaches related to Distribution network

In addition to the traditional distribution network, there are other approaches that can be used to deliver goods, services and information. These approaches include using third-party logistics providers, using drop-shipping, using peer-to-peer networks, and using digital networks.

• Third-party logistics providers: Third-party logistics providers are companies that specialize in managing the transportation, warehousing, and distribution of goods and services. They provide services such as inventory management, order fulfillment, and delivery.
• Drop-shipping: Drop-shipping is a process in which goods are shipped directly from the supplier to the customer, without having to go through a middleman. This can help reduce costs and shorten delivery times.
• Peer-to-peer networks: Peer-to-peer networks are networks of individuals or businesses who collaborate to provide goods and services. These networks can be used to bypass traditional distribution networks and provide more direct access to customers.
• Digital networks: Digital networks are networks of computers or other devices that are connected to the internet. These networks can be used to facilitate the distribution of goods and services, as well as to provide information about the goods and services.

In summary, there are a variety of approaches that can be used to deliver goods, services and information, including using third-party logistics providers, using drop-shipping, using peer-to-peer networks, and using digital networks. Each of these approaches has its own advantages and disadvantages, and the most appropriate approach will depend on the specific needs of the business.

Distribution network — recommended articles

Logistics service providers — Role of transportation — Last mile — Distribution logistics subsystem — Supply management — Last mile delivery — Outbound logistics — Regional distribution centre — Optimization of transport

References

• Chopra, S. (2003). Designing the distribution network in a supply chain. Transportation Research Part E: Logistics and Transportation Review, 39(2), 123-140.
• Ambrosino, D., & Scutella, M. G. (2005). Distribution network design: New problems and related models. European journal of operational research, 165(3), 610-624.
• Sharma, M. J., Moon, I., & Bae, H. (2008). Analytic hierarchy process to assess and optimize distribution network. Applied mathematics and computation, 202(1), 256-265.