Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

3.1 Design Options for Integrated Production, Distribution, Service, and Transportation Networks

Intended learning outcomes: Explain design options for global production networks, distribution networks, service networks, and transportation networks. Describe the network structure for decentralized distribution, and design options for retail networks. Disclose the integration of the portfolios.



At the strategic level, the value-added network of the vendor has to fulfill the requirements of the consumer. This is true for any kind of product or service, be it for consumer goods such as furniture and cars or for investments goods such as machine tool. The Figure 3.1.0.1 shows the typical phases of the product life-cycle at the consumer’s site and the classical, natural breakdown of the value-added of the vendor in the complementing processes.

Figure 3.1.0.1    Breakdown of the value-added of the vendor in the complementing processes in function of the phases of the product life-cycle at the consumer’s site.

After design, a product is produced by the vendor or his suppliers. A number of trans­port processes link the different value-added steps during this phase of the product life-cycle. Subsequently, the product is either transported directly to the consumer or to a distribution network that finally delivers the product to the consumer via a number of echelons and warehouses. Decentralized distribution can include a retail network, owned or mandated to 3rd party providers. During the use phase, a service network maintains the product, then called “service object”. For this, owned or man­dated transport networks pick up and later bring the service object at / to the customer or a collection point. If the product is used up, an adequate network will take back the product from the consumer. As a service network usually can also take back prod­ucts, there is no need for a separate network for this task.

The adequate concept may differ for each product line or product family. In making this decision, attention must also be paid to — from the very beginning — tax aspects (see Section 2.1.2). The analysis must then be integrative: a combination of designs of the production, distribution, service and transport networks must both suit the product and the targeted customer segment, and fit well together. Beginning with Section 3.1.2, the presentation follows to a large extent the one in [ScRa15].



Course section 3.1: Subsections and their intended learning outcomes

  • 3.1 Design Options for Integrated Production, Distribution, Service, and Transportation Networks

    Intended learning outcomes: Explain design options for global production networks, distribution networks, service networks, and transportation networks. Describe the network structure for decentralized distribution, and design options for retail networks. Disclose the integration of the portfolios.

  • 3.1.1 Design Options for Global Production Networks

    Intended learning outcomes: Differentiate between centralized production and decentralized production. Present features such as demand volatility, supply chain vulnerability, economies of scale, demand for consistent process quality, customer proximity, market specificity of products, value density. Explain design options for global production networks. Describe some company cases.

  • 3.1.2 Design Options for Global Distribution Networks

    Intended learning outcomes: Differentiate between centralized distribution and decentralized distribution. Present features such as demand variety, need for efficient returns, degree of customer involvement in picking up. Explain design options for global distribution networks. Describe some company cases.

  • 3.1.3 Network Structure for Decentralized Distribution, and Design Options for Retail Networks

    Intended learning outcomes: Disclose the distribution network structure and describe decision variables in its design. Present features such as available time for shopping, and simultaneously, capacity of an available means of transport of the customer, as well as the required geographical catchment area. For decentralized distribution, explain: portfolio for designing retail networks retail networks.

  • 3.1.4 Design Options for Global Service Networks

    Intended learning outcomes: Differentiate between centralized service and decentralized service. Present features such as the mobility cost ratio of the service, the degree of customer involvement in bringing and picking up the service object, as well as the need for repeated transfer of the service object. Explain design options for global service networks for services in direct contact with the object. Describe some company cases.

  • 3.1.5 Design Options for Global Transportation Networks

    Intended learning outcomes: Differentiate between direct transport and indirect transport. Present features such as size or weight of the delivery, possibility of using an existing transport network, and need for merged transport. Explain design options for global transportation networks. Describe some company cases.

  • 3.1.6 Interrelation Between and Integration of the Portfolios of Design Options

    Intended learning outcomes: Describe the interrelation between and integration of the production, transport, distribution and retail network.



Course 3: Sections and their intended learning outcomes

  • Course 3 – Supply Chain Design: Location Planning and Sustainability

    Intended learning outcomes: Produce design options for global production, distribution, service, and transportation networks. Describe location selection / configuration for a production network using qualitative / quantitative methods. Explain the concept of sustainability with reference to the triple bottom line. Disclose economic opportunities for social and environmental commitment as well as energy management concepts.

  • 3.1 Design Options for Integrated Production, Distribution, Service, and Transportation Networks

    Intended learning outcomes: Explain design options for global production networks, distribution networks, service networks, and transportation networks. Describe the network structure for decentralized distribution, and design options for retail networks. Disclose the integration of the portfolios.

  • 3.2 Location Selection and Location Configuration

    Intended learning outcomes: Differentiate between location selection and location configuration. Explain location selection using qualitative methods and factor rating. Describe location selection and location configuration with linear programming.

  • 3.3 Sustainable Supply Chains

    Intended learning outcomes: Explain the changing concept of sustainability with reference to the triple bottom line. Disclose economic opportunities for social commitment and for environmental commitment. Describe energy management concepts and measures for improved environmental performance. Produce an overview on the measurement of the environmental performance. Present social and environmental dimensions in industrial practice.

  • 3.4 Summary

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  • 3.5 Keywords

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