Distribution Network
Candlefocus EditorIn an increasingly integrated and globalized economy, the distribution network has become the most critical component in the supply chain. Distribution networks link production, inventory and customer locations, connecting them through an ever-expanding web of transportation, warehousing, and distribution points. This interconnected web of resources is key to the efficient delivery of goods from manufacturer to customer.
A well-designed distribution network should ensure that products arrive on time, in good condition, and at an acceptable cost for consumers. Little wonder then that businesses spend considerable time and energy optimizing their supply and distribution networks. They do this through careful analysis of cost, customer service, inventory and transportation options. Location to the customer and infrastructure quality are two of the most important aspects of a distribution network, but there are also important considerations in terms of the supply and demand of products, the type of product being distributed, and the desired degree of control of the product flow.
There are a number of distribution network structures which are used most widely, depending on the type of product and the company's goals and objectives. Traditional distribution networks tend to be of the hub-and-spoke variety, where a central hub is used to store and redistribute stock. Decentralized distribution networks are more closely linked to customer points, providing more direct service, but can also be more costly.
More modern types of distribution networks such as just-in-time and pull-based structures, offer greater flexibility in terms of inventory control, but tend to require higher resource investment due to the reliance on real-time communication and data exchange. Dropshipping is also becoming increasingly popular, where manufacturers have products shipped directly from their own inventory to the end customer, eliminating the need for a storage and distribution network.
No matter how it is structured, a well-designed distribution network is essential to modern businesses. It provides an efficient conduit to getting products to customers and exalts the customer experience. As a result, businesses must take care in properly designing and implementing their distribution networks in order to capitalize on their competitive advantages.