1 / 47

Distribution Centers

Distribution Centers. Outline. the call for distribution centers warehouses versus distribution centers types of distribution centers examples of distribution centers Foxconn, Wal-mart, Shiseido.  11. 1. I. 1. J.  1 J.  I 1. ….  IJ. Old Days: Point-to-point Transportation.

chen
Download Presentation

Distribution Centers

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Distribution Centers

  2. Outline • the call for distribution centers • warehouses versus distribution centers • types of distribution centers • examples of distribution centers • Foxconn, Wal-mart, Shiseido

  3. 11 1 I 1 J 1J I1 … IJ Old Days:Point-to-point Transportation Retailers Suppliers … … … … … … … …

  4. Retailers Suppliers 11 … 1 I J DC 1 1J … … … … … … I1 … IJ Recent Days: Distribution Centre shorter transportation distance, more complex co-ordination

  5. Amazon • Fulfillment by Amazon • Amazon serving as the fulfilling center for retailers • Amazon Warehouse's processing

  6. Differences Between a Warehouse & a Distribution Center* * The material is from the book“A Stitch in Time: Lean Retailing and the Transformation of Manufacturing – Lessons from the Apparel and Textile Industries ”. 6

  7. Differences Between a Warehouse & a Distribution Center

  8. Differences Between a Warehouse & a Distribution Center • objective • warehouse: primarily for storage • distribution center: primarily for consolidating goods from suppliers (vendors, shippers) to retailers (buyers, consignees) • throughput: in general DC larger than warehouse • time in site: in general DC shorter than warehouse • operations in a distribution center: • 60% to 70% cross docked and 30% to 40% reopened, repackaged • more value-added services to lessen operations in retailers • minimum quality and quantity check on retailers • practically shelf ready goods for retailers

  9. Differences Between a Warehouse & a Distribution Center • equipment • more automated equipment in DC: automatic identification, storage, retrieval, distributing, sorting, unitizing systems • cost (in 1997) • a warehouse: US$8 to US$10 million • a distribution center: US$60 to 70 million • to convert a warehouse to a DC: US$10 to 25 million

  10. Differences Between a Warehouse & a Distribution Center • personnel • a warehouse: more, especially male, on traditional operations such as loading, unloading, receiving and inspection, putaway, picking and packing, moving goods around • a distribution center • less traditional workers by the help of electronics, electrical, and mechanical equipment • more personnel on information technology and equipment maintenance

  11. The Call for Distribution Centers* * Material is from the book“A Stitch in Time: Lean Retailing and the Transformation of Manufacturing – Lessons from the Apparel and Textile Industries ”. 11

  12. Largest U.S. Retail Chains on the 2012 Global Powers of Retailing List

  13. Changes • retailers of mid 20th century: Macy’s, Sears, … • as late as 1991, Sears: 1st retailer in the world • retailers of the 21st century: Wal-mart, .. • reasons for the change?

  14. Societal Development • first transcontinental railway of US in 1869 • early days • late 19th to early 20th century • railway system for long distance transportation in large volume • telegraph (1844) and later telephone (1876) for quick information flow for long distance • development in material technology and electro-mechanical equipment

  15. Societal Development • improvement in in production and transportation (though still slow in today’s standard) • development of cities • shopping of the era: department stores, for middle to upper class • a venue with large variety of products on one hand and the elegant European boutiques feel on the other hand • successful formula: low cost by economies of scale, marketing to attract shoppers, pricing at the right amount • examples: Macy’s, Sears, etc.

  16. Societal Development • effect on retailing: apparels as an example • traditional apparel retailing before mid 20th century • relative long range forecast • large volume, low frequency • successful formula: merchandising - right product mix to provide affordable, desirable goods • formula no longer work after mid 20th century

  17. Recent News for Department Stores • Macy’s filed for Bankruptcy in 1992, but … • Web headings for Sears • 2009 Aug 4” Why Sears will (and should) End up in Bankruptcy? • 2011 Dec 29: Is Sears Headed for Bankruptcy? • 2012 Jan 12: Tears for Sears: American Icon in Trouble. • Why?

  18. Societal Development • starting mid 20th century • quicker in transportation • development of the automobile industry and the highway systems • possibility of moving medium amount of goods for a couple of hundred miles by trucks • containerization • communization of air transport • computer for information flow and processing • moving of residents from downtown to suburban areas

  19. Societal Development • shopping of the era: discount stores in suburban areas • daily necessities for suburban residents • successful formula: economies of scale, convenience, low cost by simple decoration, efficient logistics, and advanced information technology

  20. Problems for Traditional Apparel Retailing Since mid 20th Century • product proliferation : hard to predict actual demand accurately • change of customer behavior leading to many styles • over capacity, e.g., increasing in retail space per capita • 5.3ft2 (1964)  9ft2 (1974)  16ft2 (1988)  19ft2 (1996) (Mexico 0.3ft2) • reduction in consumer expenditure • $1710 (1992)  $1698 (1994); 14.3 (1967)  28.7 garments (1995) • expensive costs in markdowns, stock-outs, and inventory holding • estimate in 1985: $14 billion on markdowns, $6 billion on loss of sales, and $5 billion on inventory holding

  21. The Call for Lean Retailing • traditional retailing model being out of date • the needs for quick response retailing • universal numbering system of goods • automatic identification • standards across firms • information flow and processing • modern distribution centers

  22. Different Types of Distribution Centers* * The material is from the book「物流中心的規劃技術」. 22

  23. Different Types of Distribution Centers • classified by different methods • by temperature: • by operator: • by goods: • by functionality: ambient, refrigerated, freezing manufacturers, retailers, perishables, import traders, wholesalers, 3-party logistics service providers, truckers, couriers, sea freight service providers, air freight service providers food, daily necessarity, medicine, cosmetics, electrical appliances, 3C products, books, apparels, shoes, auto parts regional, front, cross docking

  24. Convenience Store Supermarket Discount Store # of SKU % of order picking pallet in, pallet out pallet in, case out case in, item out Different Types of Distribution Centers • operations and equipment changed with nature of DC for in DC 3,000 6,000 10,000 --- 10% 40% 30% 60% 60% 70% 30% ---

  25. Different Types of Distribution Centers • operations & equipment changed with nature of DC • examples • DC for food and vegetables • temperature control: air conditioning 15C to 18C; refrigerated 0C to 5C; freezer -25C • cross-docking mode for fresh food • special design trucks • DC of manufacturers • smaller number of SKU in larger quantity

  26. Different Types of Distribution Centers • operations & equipment changed with nature of DC • examples • DC of 3-party logistics service providers • consolidation of multiple types of goods • more building up and breaking down services • value added services • ….

  27. The e-Hub of Foxconn* * Part of the material is from the book「郭台銘與富士康」. 27

  28. The Distribution Center of Foxconn for Dell • Foxconn • one of the best 3C-product manufacturers • services including design, development, and after-sales services in addition to manufacturing and assembling • performance in 2010 • revenue: US$116 billion • profit: US$2.74 billion • profit margin: 2.36%

  29. The Distribution Center of Foxconn for Dell • Dell: one of the best among direct sales and e-business • designing and selling computers and their peripherals • providing before- and after-sales services for her products • performance in fiscal year 2011 • revenue US$61.5 billion • net profit: US$3.1 billion (number changed with the accounting system) • profit margin: 5%

  30. The Distribution Center of Foxconn for Dell • the fast growing Dell (50% annually) required flexibility from its suppliers • demand: a target, but possible to adjust upwards • components: possible to change with the ever expanding market • capacity of supplier • not taken up fully by Dell and possible to expand quickly • vendor managed inventory • suppliers responsible for inventory (component value reduced by 0.5% to 1% per week) • only parts and components sent to factories for assembly being paid by Dell

  31. The Distribution Center of Foxconn for Dell • e-Hub of Foxconn • a distribution center with information processing capability beside the manufacturing and assembly plants • full information on production schedule and statue • inventory • “zero” for manufacturing and assembly plants • less than 2 days for e-Hub • accurate forecasting of demands by e-Hub • 100 containers of parts and components per week

  32. Distribution Centers of WalMart* * The material is from the book“Sam Walton: Made in America”. 32

  33. Distribution Centers of WalMart • by 1992 • 20 distribution centers, total area 18,000,000 sq ft • 4 distribution plans running by WalMart’s fleet • all stores • within one day drive from a distribution center • placing orders in computer • 80K SKU, providing 86% goods (competitors: 50% to 65%) • lead time 2 days (competitors: 5 days) • transportation cost 3% (competitors: 4.5% to 5%)

  34. Distribution Centers of WalMart • a typical distribution center • 1.1 million sq ft (23 foot fields; 150 acres  60.7 hect.) • 200,000 boxes every day by 600 to 800 persons • docks: 135 incoming and 30 outgoing • 24 hours per day • technologically advanced • computerized system • real-time status and location information for all items • 8.5 miles lazer directed conveyor belts

  35. DistributionCenters of WalMart

  36. A Distribution Center of Shiseido 36

  37. Shiseido • the oldest and the 4th largest cosmetics company in the world • 40,563 employees worldwide at 2011

  38. Products of Shiseido – Old Days • toothpaste, vitamin tablet, ice cream, skin care products, face powders, hair tonic, cold cream, fragrances, lotion

  39. Products of Shiseido - Nowadays • skin care • make-up • fragrance • body care • sun care • hair care • men

  40. Statistics

  41. The Challenge faced by a Distribution Center • serve several hundred franchised stores • many products, of small sizes • minimal inventory in stores • each store • multiple orders per day • multiple deliveries per day

  42. The Challenge Faced by a Distribution Center • economies of scale in delivery • full truckloads by consolidating goods for stores • challenges: to store, pick, sort the small items

  43. Schematic Diagram of the Distribution Center

  44. In the Distribution Center • boxes to hold small pieces for transportation • automatic storage, transportation, and sorting

  45. In the Distribution Center • automatic storage, transportation, and sorting

  46. In the Distribution Center • automatic storage, transportation, and sorting • computerized control

  47. A Distribution Center of Amazon 47

More Related