Supply Chain Distribution
Many companies face the dilemma of selling large or unique products, manufacturing and storing or warehousing those products, and getting those products to the customer. In present times, the cost of manufacturing, storage and the logistics of distributing these products often affect the bottom line of a company, therefore; it makes good business sense for a company to have a sales office at one location or online and its manufacturing and inventory at another location. The process of manufacturing, storing, distributing, and sometimes purchasing this inventory is called supply chain distribution.
Supply chain distribution has flourished in recent years, because the business savvy professional has utilized supply chain software and supply chain technology to streamline the process of ordering, manufacturing and distribution to its customers. Some examples of businesses that utilize supply chain distribution include technology companies, major retail companies, and health and vitamin companies.
Technology companies often utilize third party logistics to distribute their product. With third party logistics, the sale, modifications to the product, and the distribution can all be handled through one distribution facility at a low cost to the distributor and of great benefit to the original manufacturer. A key component to third party logistics and supply chain distribution is the health of the entire system. The processes of product coming in, the manufacturing or productions of the product, and the distribution of the product can all be streamlined if the flow through the warehouse is smooth. This is where inventory control, lean thinking, and operations management play the most important roles.
Inventory control is most important as the product passes through the entire warehouse. Loss of inventory or failure to track an item results in a loss for the company and the customer as well as investors in the long run. For example, in third party logistics, the product is received into the distribution facility through a shipment that ideally arrives in a specific area of the facility and that product is tracked through inventory control throughout its entire lifespan in the facility and sometimes even up to actual delivery to the customer. This can be done through innovative technology such as logistics software or radio frequency identification tags (RFID). Once the product is inventoried and ordered from a customer, any modifications or manufacturing that is required would ideally be handled within a separate part of the facility and after modifications, the product would be shipped from another area of the facility. Lean thinking comes into play here because instead of having one worker inventory, manufacture and ship the product; operations management would create supply chain jobs that are specific to the process that is being completed so that they are able to do more with less. Muddying up any of the processes of receiving, inventorying, manufacturing and shipping with another process can impeded the worker and task that person with too much to do. Supply chain jobs usually specialize and a worker is classified as a receiver, manufacturer, or shipper whose sole job is to ensure their portion of the process is completed in a timely, efficient and cost effective manner.
In order to be cost effective, timely and efficient when distributing large or unique products, companies that look to supply chain distribution and even third party logistics often hold a competitive advantage to their competitors. This competitive edge results from being able to keep prices low through specializations and by doing more with less which is the result of a healthy supply chain distribution process.