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Managing Fulfillment
Operations
Learning Objectives
Discuss the strategic value-adding role
Figure 11.1
Figure 11.2
Table 11.1
Figure 11.3
Functional Tradeoffs
Figure 11.4
Distribution Challenges
Labor availability
Demand variation
Increasing customer requirements
Distribution Challenges
Labor availability
Demand variation
Increasing customer requirements
Network Design Issues
Inventory positioning focuses on the issue of
where inventory is located within the supply
chain
Single location
Multiple customer-facing positions
Own or contract?
Private DCs are internal facilities owned by the
organization
Public warehousing is the traditional external
distribution option
Contract warehousing is a customized version of public
warehousing in which an external company provides a
Facility Considerations
First facility consideration is to determine the
size of each operation within the network.
An area may be needed for processing rework and
returns
Office space is needed for administrative and clerical
activities
Space must be planned for miscellaneous requirements
Figure 11.6
Figure 11.7
Table 11.2
Table 11.3
Distribution Execution
Product-Handling Functions
Receiving transferring goods into facility
Put away moving goods into storage locations
Order picking selecting goods for customers
Replenishment moving product from storage
locations to picking slots
Shipping loading goods for delivery
Support Functions
Inventory control
Safety, maintenance, and sanitation
Figure 11.8
Table 11.4
Distribution Metrics
Customer Facing Measures
Order accuracy and order completeness
Customers want to receive the exact products and
quantities that they ordered, not substitute items,
incorrectly shipped items, or wrong quantities
Timeliness is a critical component of customer
service
Perfect order index (POI)
Internal Measures
Distribution cost efficiency
Aggregate cost efficiency
Asset utilization
Resource productivity
Distribution costs averaging nearly 10 percent of a
sales dollar
Resource efficiency
Table 11.5
Source: Manrodt, Tillman, and Vitasek, A Bright Side to Dark Times, DC Velocity (April
2010) 42-44
Distribution Technology
Warehouse Management Systems
Software control system that improves
product movement and storage operations
Value-added capabilities
Generate performance reports
Support paperless processes
Enable integration of materials handling equipment
Picking systems
Sorting systems
Leverage wireless communication
Summary
Summary, continued
Summary, continued
Summary, continued