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Distribution Networks in Supply Chain

Introduction

Jespersen and Skjott-Larsen (2012) define the term supply chain (SC) as ‘the network of production facilities, suppliers, logistical operations, warehouses, and targeted markets’ (p. 39). The supply chain process makes it easier for companies ‘to acquire raw materials, manufacture products, store them in warehouses, and distribute them to the consumers’ (Smith & Berry 2009, p. 42). This observation shows clearly that business organizations will always have complex supply chain networks.

Businesses should manage such networks efficiently to perform optimally. Collaboration is needed among the major stakeholders involved throughout the process because it improves the level of performance (Walsh & Wellman 2003). The targeted topic, therefore, focuses on networks in supply chain and distribution warehousing.

Critical Literature Review

The relevance of the Topic

Supply chain management is the ultimate function that ensures the targeted consumer gets quality products and services. A firm should be able to address the barriers and challenges affecting its supply chain network (Garg et al. 2012). This approach will result in an effective supply chain. Past studies have attempted to offer conclusive strategies that can be used to design effective supply chain networks. Some experts have proposed the use of centralized supply chains to monitor every logistical process (Done 2011). Some scholars have argued that effective and properly coordinated supply chains have higher chances of producing positive results.

The issue of warehousing plays a critical role in every supply chain network. To achieve positive results, a company can decide to design the best warehousing networks. The strategies used to design such warehouses include the use of centralized or decentralized methods (Felea & Albastroiu 2013). The targeted topic will, therefore, focus on the role of effective networks in supply chain processes.

Challenges Faced by Companies

Many organizations have failed to realize their business goals because of the gaps affecting their supply chain networks. Such firms have been unable to realize their potentials because of poorly-managed supply chain networks (Simchi-Levi, Kaminsky & Simchi-Levi 2008). Business firms tend to have complex supply chain networks characterized by marketers, suppliers, production managers, and logistical providers (Simchi-Levi et al. 2008). Some companies are known to outsource most of their logistical operations to minimize risks and costs. This strategy also increases the complexities associated with their supply chain networks (Walsh & Wellman 2003).

Consequently, numerous problems have emerged because of this complexity. One of the issues associated with different supply chain networks is communication breakdown (Simchi-Levi et al. 2008). This kind of breakdown is also attributable to a lack of coordination or collaboration. The presence of many players within the supply chain network is something that must be examined carefully. More often than not, companies using centralized warehouses in their supply chains tend to encounter numerous problems.

Failure to design an effective distribution network is a major issue that can affect the level of performance. Scholars believe that ‘the best supply chain network must be supported using effective warehousing practices and incident response systems’ (Naslund & Williamson 2010, p. 14). Many companies fail to embrace the power of effective supply chain management. The best warehousing practices are also ignored by many companies.

Smith and Berry (2009) believe that ‘a proper warehousing approach should be guided by the nature of the product, customer expectations, and several stakeholders in the supply chain’ (p. 43). Companies that ignore these issues are usually unable to realize their potentials. On the other hand, firms that professionally design their supply chains find it easier to achieve their business potentials (Shao, Krishnan & McCormick 2010).

The relevance of the Study

Naslund and Williamson (2010) indicate that companies should have effective supply chain networks in an attempt to achieve their business objectives. Some analysts have also identified some of the major problems associated with supply chain networks. The use of proper management, collaboration, and coordination can make it easier for an organization to control every logistical process (Konecka 2010). Warehousing is managed by the company while at the same time monitoring the performance of different players.

When it comes to the process of designing warehouses, companies can focus on decentralized or centralized approaches. They should consider the nature of the targeted market and the needs of the end-user (Felea & Albastroiu 2013). A company marketing non-perishable goods will benefit significantly from decentralized warehousing. On the other hand, a company targeting a specific market segment can use a centralized warehousing technique to support the needs of every consumer.

Every supply chain network and warehousing approach has the potential to deliver positive results. The important thing is for companies to be aware of their business models and targeted goals. With this kind of knowledge, the organization finds it easier to plan, control and schedule every production process. The findings and ideas obtained from the study will encourage more companies to design effective supply chain networks and distribution warehouses.

Recent Researches and Findings

Globalization has forced many companies to embrace powerful strategies that can result in positive performance. Business organizations have established new partners with contractors, customers, suppliers, and specialists (Naslund & Williamson 2010). As well, many companies outsource a wide range of functions in an attempt to minimize costs. These aspects explain why every multinational company has a complex supply chain. Production and distribution have become complex aspects of every supply chain network. That being the case, every business firm should design an effective supply chain network to address the major issues affecting its performance (Jespersen & Skjott-Larsen 2012).

Warehousing should be taken seriously because it supports the performance of every supply chain process. Felea and Albastroiu (2013) indicate that every warehouse should be strategically positioned to ensure the logistical process is smooth. This strategy has the potential to increase competitiveness and optimization. The major logistical and warehousing activities are also completed in a coordinated manner (Konecka 2010).

Decentralized distribution warehouses in the supply chain network have the potential to reduce barriers, wastes, and inefficiencies (Schmitt et al. 2015). The distribution model also ‘promotes interactions among entities and eventually improves the success of the entire supply chain network’ (Walsh & Wellman 2003, p. 528). Companies should, therefore, select the best distribution warehousing strategies to realize their business potentials (Walsh & Wellman 2003).

Conclusion

One of the most important functions of an organization is supply chain management (SCM). This proposed study is appropriate for understanding the major practices and strategies that can make every supply chain network successful (Naslund & Williamson 2010). The findings will make it easier for more companies to design the most effective and sustainable supply chains. Organizations can focus on decentralized or centralized warehouses depending on their business models and goals (Walsh W & Wellman 2003). This topic will, therefore, present meaningful ideas and concepts that can be used by companies to design sustainable supply chains.

List of References

Done, A 2011, ‘Supply Chain Knowledge Management: A Conceptual Framework’, Working Paper, vol. 1, no. 1, pp. 1-23. Web.

Felea, M & Albastroiu, I 2013, ‘Defining the Concept of Supply Chain Management and its Relevance to Romanian Academics and Practitioners’, Amfiteatru Economic, vol. 1, no. 1, pp. 74-88. Web.

Garg, D, Narahari, Y, Foster, E, Kulkarni, D & Tew, J 2012, ‘A Groves Mechanism Approach to Decentralised Design of Supply Chains’, Manufacturing Systems Research, vol. 1, no. 1, pp. 1-8. Web.

Jespersen, B & Skjott-Larsen, T 2012, Supply Chain Management: In Theory and Practice, John Wiley and Sons, New York. Web.

Konecka, S 2010, ‘Lean and Agile Supply Chain Management Concepts in the Aspect of Risk Management’, Electronic Scientific Journal of Logistics, vol. 6, no. 3, pp. 23-31. Web.

Naslund, D & Williamson, S 2010, ‘What is Management in Supply Chain Management: A Critical Review of Definitions, Frameworks and Terminology’, Journal of Management Policy and Practice, vol. 11, no. 4, pp. 11-28. Web.

Schmitt, A, Sun, S, Snyder, L & Shen, Z 2015, ‘Centralisation versus Decentralisation: Risk Pooling, Risk Diversification, and Supply Chain Disruptions’, Omega, vol. 1, no. 1, pp. 201-212. Web.

Shao, J, Krishnan, H & McCormick, T 2010, ‘Incentives for Trans-shipment in a Supply Chain with Decentralised Retailers’, Sauder Journal, vol. 1, no. 1, pp. 1-21. Web.

Simchi-Levi, D, Kaminsky, P & Simchi-Levi, E 2008, Designing and Managing the Supply Chain, McGraw Hill, New York. Web.

Smith, P & Berry, C 2009, Strategic Marketing Communications, Kogan Page, London. Web.

Walsh, W & Wellman, M 2003, ‘Decentralised Supply Chain Formation: A Market Protocol and Competitive Equilibrium Analysis’, Journal of Artificial Intelligence Research, vol. 19, no. 1, pp.  513-567. Web.