Distribution Network and How to Optimise It

A supply chain system depends on a complex logistics life cycle of purchasing raw materials to transportation, warehousing, and distribution. Optimising the distribution network is a critical factor that makes a business agile and responsive to the customer’s needs. Some classic examples of such optimisation are Amazon and Walmart, which used strategic options such as distribution centers and decentralisation. In this article, let us look at strategies to ensure your business runs on an optimised distribution network.

What is a Distribution Network?

A distribution network is a series of interconnected transportation systems that facilitate the movement of goods from the manufacturer to the end consumer. The network is responsible for storing, handling, and delivering the goods to the customers. Therefore, an optimised distribution network ensures that a business achieves an improved bottom line. The primary purpose of such a logistics process is to minimise transportation costs, reduce delivery time, and provide reliable service.

How to Build a Robust Distribution Network?

A robust distribution network will depend on the goals you want the network to achieve for your business. Hence, a comprehensive study of the factors that influence the distribution network and the type of transportation system that will suit your business needs must be completed before building such a system. The following sections discuss these elements in detail:

Factors Used in Designing a Distribution Network

• Nature of Products: The nature of the products being transported significantly impacts the design of the distribution network. Different products have different storage and handling requirements, and the network must be designed to accommodate these requirements.
• Network Size: The size of the distribution network is another vital factor to consider. A more extensive network may require more resources and management, while a smaller network may not meet the growing business’s demand.
• Geographical Locations of Distribution Centers: The geographical locations of the distribution centers are also essential to consider. The network should be designed to minimise the distance goods need to travel, reducing delivery times and transportation costs.

Goals for an Optimised Distribution Network

• Minimise Transportation Costs: An optimised distribution network should minimise transportation costs by reducing the distance goods need to travel.
• Reduce Delivery Times: Delivery times can be reduced by designing the network to take advantage of regional transportation systems that reduce the distance goods need to travel.
• Increase Delivery Reliability: An optimised distribution network should also increase delivery reliability by reducing the risk of delivery delays and ensuring that goods are delivered to customers on time.

Transportation System Options to Consider

• Transportation Routes and Patterns: Understanding the transportation routes and patterns is crucial for optimising the distribution network. The network should be designed to take advantage of the most efficient transportation routes.
• Volume of Goods: The volume of goods transported is another important factor to consider when optimising the distribution network. The network should be designed to accommodate the volume of goods transported without compromising on delivery times and reliability.
• Storage and Handling Requirements: The storage and handling requirements of the products transported must also be considered when optimising the distribution network. The network should be designed to accommodate these requirements, ensuring the safe and efficient storage and handling of goods.

How to Optimise Your Distribution Network: Four Strategies to Consider

First Strategy: Implementing a Multi-Tier Distribution System

A multi-tier distribution system involves multiple distribution centers in different regions, each serving a specific geographic area. It helps reduce the distance goods need to travel by taking advantage of regional transportation networks. It also reduces transportation costs as the distance the goods need to travel is minimized, and the number of vehicles required is also reduced.

Second Strategy: Investing in the Right Technology

Investing in technology can help streamline operations, automate processes, and provide real-time visibility into the movement of goods throughout the supply chain. This can improve delivery times and reliability and minimise transportation costs.

Technologies like Transportation Management Systems (TMS), Warehouse Management Systems (WMS), and Real-time Tracking Systems help automate processes, provide real-time visibility into the movement of goods, and enable organisations to make informed decisions about their supply chain operations.

Third Strategy: Collaborating with Service Providers

Collaborating with order fulfillment service providers can help optimise the distribution network as you get access to their transportation and storage infrastructure, expertise, and technology. The service providers also help improve the reliability and efficiency of the supply chain, as well as reduce transportation costs and delivery times.

Fourth Strategy: Conducting Regular Reviews

Regularly reviewing the distribution network is crucial to ensure its continued optimisation. This can help identify areas that need improvement and ensure that the network remains efficient and effective.

When reviewing the distribution network, factors such as transportation costs, delivery times, and delivery reliability should be considered. By regularly monitoring these factors, businesses can make informed decisions about their supply chain operations and ensure that their distribution network remains optimised.

Conclusion

Optimising the distribution network is crucial to ensure the efficient and effective delivery of goods in the supply chain. By considering factors such as the nature of products, network size, and geographical locations of distribution centers, designing a robust distribution network becomes more accessible. With the help of the strategies discussed above, you can optimize the distribution network in the supply chain seamlessly.

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