Comparative Performance Analysis of Delivery Network Designs

Supply chain is a network of facilities, such as suppliers, plants, distributors, warehouses,

retailers which performs a set of operations including procurement of components and raw
materials, assembling of products, storage and handling of semi-finished and finished products,
transportation and delivery of products, and so on. Distribution refers to the steps taken to move
and store a product from the supplier stage to a customer stage in the supply chain. Distribution
is a key driver of the overall profitability of a firm because it directly affects both the supply
chain cost and the customer experience. Choice of distribution network can achieve supply chain
objectives from low cost to high responsiveness. As a result, companies in the same industry
often select very different distribution networks. Effective supply chain distribution network
design needs to consider various performance dimensions and product characteristics. It is
clearly important to design or redesign a production distribution network based on a
comprehensive optimization analysis. The results obtained by academic researchers have been
partially put into The 4th International Conference on Industrial, Mechanical, Electrical, and
Chemical Engineering practice. Recently, researchers have begun to realize that the decision and
integration effort in supply chain design should be driven by a comprehensive set of performance
metrics and also product characteristics. Despite attempts to choose the best delivery network
design or combination of design, it is still a major challenge for the decision maker. There is still
a need to investigate the design/selection of an appropriate supply chain distribution network
design to achieve optimal performance, which is measured using a set of metrics and criteria.
Most decision makers make qualitative analysis to design the distribution network. Through their
experience and intuition, they select a combination of these network designs. But there is no
research so far in optimizing the designs objectively to make feasible decisions whether it is a
single or combination of selections. Therefore, this research provides a framework and
identifying key dimensions along which to evaluate the performance of any distribution network
for ketchup sauce manufacturers. To achieve this goal, a multi-criteria decision-making tool,
Analytical Hierarchy Process (AHP), is applied
 Retail Manufacturer Manufacturer Distributor Distributor Man
Storage Storage with Storage with Storage with storage with sto
with Direct IN-Transit Package last mile p
Customer Shipping Merge Carrier delivery
Pickup Delivery
Response Time 1 4 4 3 2
Product Variety 4 1 1 2 3
Product Availability 4 1 1 2 3
Customer Experience 5 4 3 2 1
Order Visibility 1 5 4 3 2
Returnability 1 5 5 4 3
Inventory 4 1 1 2 3
Transportation 1 4 3 2 5
Facility & Handling 6 1 2 3 4
Information 1 4 4 3 2
Response Time: This refers the time period between the order place to delivery receives.
 Response time for retail storage with customer pickup is better than other delivery
network.
 Response time for manufacture storage with direct shipping is long process. Might take
1 to 2 weeks.
 For manufacture storage response time with in the transit merge is a long time process.
 For distributor storage with package carrier delivery the response time is faster then
manufacture storage.
 Distributor storage with last mile delivery, the response time is faster and quick but not
as fast as retail storage with customer pickup.
 For manufacturer storage the response time with pickup is also a long process.

Product Variety: It is the number of different product or configuration that are offered by the
distribution network.
 Within the customer pickup network, there are low variety of products in retail
storage.
 It is very easy to provide a high variety of product if manufacturer storage is with
direct shipping.
 There are high product variety in storage manufacture with direct shipping, which is
easier to provide.
 There are average level of product variety in distributor storage with package carrier
delivery which is less easier then manufacturer storage.
 Less product variety in distributor storage with last mile delivery.
 High product variety and easy to provide high variety of product order to the
customer within the manufacturer storage and pickup delivery channel.

Product Availability: This is the probability of having a product in stock when a customer order
arrives.
 Low product availability in retail storage with customer pickup.
 There are high level of product variety in manufacturer storage direct shipping
delivery network.
 Large scale products are available in manufacturer with in transit merge delivery
channel and low cost to provide.
 More then average level of products are available in distributor storage with package
carrier delivery but high cost to provided it.
 More expensive to provide higher product availability in distributor storage with last
mile delivery.
 In the product availability cost is lower than the other channels.

Customer Experience: Customer experience includes the ease with which customers can place
and receive order as well as the extent to which the experience is customized.
 Relatively the customer experience is lower then the other delivery network in retail
storage with customer pickup.
 For manufacturer storage with direct shipping delivery network the customer
experience is below average in term of home delivery.
 In manufacturer storage with in transit merge there is better customer experience then
drop shipping because single delivery has to be provided.
 Can get better customer experience than manufacturer storage in distributor storage
with carrier delivery.
 Distributor storage with last mile delivery provider the best customer exzperience
especially for bulky products.
 Manufacturer provides the lowest customer experience in manufacturer storage with
pickup.

Order Visibility: It is the ability of customer to track their order, placement to delivery.
 In the retail storage with customer pickup is difficult in order visibility.
 In manufacturer storage with direct shipping there are two stages involved customer
order so it is difficult to track order.
 Order visibility in manufacturer storage with in transiot merge, is less difficult to track
order then direc6 shipping.
 Order visibility in distributor storage with package carrier delivery is easier then
manufacture storage.
 In distributor storage with last mile delivery the order delivery visibility is less of an
issue and easier to implement.
 In manufacturer storage with pick up the order tracking process is more difficult than
other delivery network.

Returnability: This is the ease with which a customer can unsatisfactorily return product.
 Returnability for retail storage with customer pickup.
 For manufacture storage with direct shipping is relatively expensive and difficult to
implement.
 Retun ability is much expensive and difficult as manufacturer storage with direct
shipping in manufacturer storage with in transit merge.
 Returnability is easier and less costly then manufacturer storage in distributor
shortage with pickup carrier delivery.
 Much easier then manufacturer and distributor storage in last mile delivery.
 Some what easier then the other delivery process the return ability is in manufacturer
storage with pickup.

Inventory: This encompasses all raw materials work in process and finished goods within the
supply chain.
 Inventory cost is high in retail storage with customer pickup because of lack of
aggregation.
 There is low inventory cost in direct shipping benefits of aggregation are highest for
low-demand high vale items.
 There is also low inventory cost in manufacturer storage with in transit merge.
 In distribution storage with package carrier delivery system there is higher inventory
cost then manufacturer storage.
 Inventory in distributor storage with last mile delivery is higher than the manufacturer
storage.
 Low inventory cost then other delivery networks in manufacturer storage with pickup.

Transportation: This refers the movement of products from one location to another.
 Transportation service for retail storage with customer pickup is better then other.
 Transportation cost is high because of increased distance and disaggrigated shipping.
 Lower transportation cost in manufacturer with in transit merge then drop shipping.
 In distribution storage with package carrier delivery the transportation cost is lower
then manufacture storage. Where there is low cost is for fast moving products.
 In distribution storage with last mile delivery the transportation cost higher then the
other delivery networks.
 The transportation costy is lowest then all other delivery in manufacturer storage with
pickup.

Facility and Handling: This is tghe physical place in the supply chain where products are stored
assembled or fabricated.
 Facilities and handling is more difficult in retail shortage with customer pickup.
 Lower facility cost in facility and handling in manufacturer storage with direct
shipping.
 Handling cost is higher then the drop shipping in in-transit merge.
 Facility and handling cost is higher then the other delivery network in distributor
\storage with carrier delivery for fast moving items.
 Facility costs are higher manufacture storage and distributor storage in manufacture
storage with pickup. But the cost is lower then retail storage.
Information: Information consists of data analysis of supply chain drivers as facilities,
inventories etc.
 Customer can easily get new product information in retail storage with customer
pickup.
 Passing new product information in manufacturer storage with direct shipping is
difficult or impossible.
 Information passing is also difficult in manufacture storage in- transit storage merge
for drop shipping.
 It is a bit easier then manufacturer storage in distributor storage with carrier delivery.
 A bit more easier then distreibutor storage with carrier delivery in distributor storage
with last mile delivery.
 Most difficult or most harder or higher cost need to pass information about new
product in manufacturer storage with pickup channel.