Discussion Question: What are some distribution strategies and how are these used?
2 paragraphs, APA reference.
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Youtube Reference 2: Chapter 7
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Throughout the chapter several different strategies were discussed, initially breaking them down between directly shipped items and intermediate inventory storage points. First we will mention Direct Shipments, which according to Simchi-Levi, Kaminsky, & Simchi-Levi (2008), are shipments sent directly from the manufacturer to the retailer or customer, typically to reduce warehousing/ distribution center cost and reduce the lead times associated with those items. There is also the Traditional Warehousing strategy where inventory is stored at warehouses, either located centrally or locally, depending on cost analysis and the variability of demand, to include lead time analysis.
There are also strategies that aren’t quite as traditional, such as Cross-docking, inventory pooling, and Transshipments. Cross-docking is a warehouse strategy used to reduce storage time by allowing items to be transferred from one vehicle to another, in a short amount of time, to get items to their final destination without sitting on a warehouse shelf for an extended period. They can also be used to reduce transportation cost, as a full truck load can be ordered and then split up among vehicles at the cross docking to service multiple facilities.
Inventory pooling and transshipments are very similar in that they use additional inventory at separate facility to meet demand. Basically the only difference being that the transshipment is within “the same level of the supply chain” (Simchi-Levi et al, 2008, p. 239). Part stores, such as Advanced, provide a good example as they typically will ship parts from store to store to meet a customer’s needs. Inventory pooling is much more of a traditional storage concept where inventory is kept at a facility available to for all retailers to pull from to meet demand and improve the customer experience. This type of strategy is typically more beneficial to the smaller retailers, as it make inventory available to everyone.
Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2008). Designing and managing the supply chain: Concepts, strategies and case studies. New York, NY. McGraw-Hill Irwin