Managers must consider efficiency and waste elimination for inbound vehicles as they assign vehicles to a dock door and schedule off-loading. When applying lean principles to outbound operations, managers must consider product consolidation, sequencing, departure time, and dock door assignment for outbound vehicles.
As mentioned in the Module Notes, it is necessary to identify and eliminate waste within distribution systems to lower costs and increase efficiency. Managers must consider customer service, overhead costs, inventory costs, and other issues as they seek to eliminate waste and reduce costs.
In preparation for this discussion, please read the M4.1 Required Readings.
***Complete your initial post using the module reading resources as a tool, address the following:
-Choose a global manufacturing firm and conduct research into the process they use to distribute their products. Provide a brief summary of the transportation networks and storage facilities that are used to distribute their products from point of manufacturing to the end user (customer).
-Provide an analysis of different areas of waste that could occur within transportation networks in the distribution process (examine at least two specific examples).
-Examine the wastes eliminated using cross-docking operations within the distribution network (provide at least two wastes identified).
NOTES:
Moving products from the manufacturer to the customer in the distribution systems is a critical operation costing businesses millions of dollars every year. Through the application of lean principles to the functions within distribution networks, managers can eliminate waste and reduce costs within logistics networks.
Figure 4.3 represents the flow of material, information, and funds from multiple suppliers through inbound transportation, operations, distribution, service, and multiple customers. In this module, we will look at how outbound transportation and distribution work together.
This image is a graphic representation of a supply chain. Starting on the left and moving right, it shows four level three suppliers that feed materials to level two suppliers who feed materials to suppliers. Those suppliers move inventory to operations through inbound transportation. The image also shows that inventory is moved by means of outbound transportation then through the distribution chain to customers. The image shows that products then move on to second and third levels of customers. Above the image, there are arrows indicating that material, information, and funds flow back and forth through the supply chain. Below the image, there are arrows indicating that materials management is responsible for inventory from all levels of suppliers to operations facilities. Also below the image are arrows indicating that physical distribution (or channel) management is responsible for the movement of inventory from operations to all levels of customers.
Introduction
In the last module, we covered the importance of the application of lean principles within the inventory management system. Now, we must move forward and learn about the distribution channel, which is another important part of a business’s operations. In fact, the actual distribution of products strongly influences a firm’s profitability as it impacts both costs and the customer’s experience (Ribas, Lusa, & Corominas, 2019). When a company fails to maximize efficiency with transportation, warehousing, and distribution operations, final products accumulate additional costs that the customer is unwilling to pay, which results in poor customer service and lower profits. Therefore, eliminating waste in the distribution system is necessary to increase business efficiency and competitiveness. However, to eliminate wastes within the distribution system, you must understand the functions within that process.
Components of Distribution Systems
While distribution is the physical process that moves products from the manufacturer to the customer, distribution systems encompass both the transportation and warehousing functions of a logistics network (Wallmann & Gerschberger, 2021). The function of moving products from the manufacturer to the customer is known by several terms, including upstream logistics, outbound logistics, and distribution. In this class, we will refer to this operation as distribution, and it is performed through the distribution network or system. Additionally, these distribution networks can be as simple as a few vehicles and a single warehouse. However, more complex distribution systems rely on thousands of retailers and wholesalers operating in over 100 countries worldwide.
Within distribution networks, warehouses function as the facility where items are received, stored, and shipped. Often, managers must store products as extra stock or safety inventory to combat errors in supply chain calculations and predictions. However, as we saw in previous modules, inventory storage is expensive and inefficient and considered a waste if it adds no value to the product. In this module, we will learn how traditional warehouses have been replaced with more efficient facilities.
At a distribution center, products are off-loaded at receiving docks and then moved through sorting operations in the center of the building. Once sorted and consolidated with other products, they will be shipped to final customer in vehicles at loading docks in another section of the facility. You will learn more about distribution networks in the Ribas et al. (2019) required reading within this module.
Within distribution systems, transportation networks serve as the means to physically move products from one location to the next. This movement can be accomplished through air, land, or water transportation or any combination of the three. When multiple modes of transportation is utilized within the distribution network, the move is called multimodal or intermodal. Multimodal transportation is shipment of goods via more than one mode of transportation, but multimodal transportation moves goods throughout the distribution system without the need to handle the cargo when changing from one mode of transport to another (Archetti, Peirano, * Speranza, 2021).
In Figure 4.5, you can see freight that is being transported by rail in shipping containers that will be directly loaded onto trucks utilizing intermodal transport. With intermodal shipping, cargo is moved by more than one method of shipment (here, rail and truck) without handling the items inside the container. When using intermodal transportation methods, shippers can reduce waste by eliminating excess cargo handling.
This image is a picture of containers stacked two high and loaded on a moving train. The train is moving through a dry countryside with white fluffy clouds in the sky.
Lean Distribution Systems
Lean distribution involves ensuring the right product is available to the final customer at the right time and place while simultaneously ensuring waste is reduced or eliminated. Additionally, those lean principles should be applied throughout the distribution network to increase efficiency and competitiveness. Application of lean principles throughout the distribution network requires that managers eliminate waste within warehousing, transportation, and distribution functions.
To reduce or eliminate waste in a warehouse, businesses are moving from warehouses to distribution centers that focus on receiving and shipping while simultaneously minimizing storage of inventory. Within these distribution centers, managers use cross-docking to eliminate waste through product (inventory) storage. In normal cross-docking operations, items are received, sorted, consolidated with other products, and shipped to new destinations within 24 hours (Robichet & Nierat, 2021). You will see cross-docking operations in action in the required videos for this module.
