Assessment Three Value Addition

Reverse Distribution

The ultimate role of a supply chain includes ensuring adequate distribution of products from the manufacturer to the respective customers within the locations that they are and operate in. According to Oberlo (2020) distribution highlights activities including the selling and delivery of products and services from manufacturers to the customer. It entails making the product available for purchase by dispersing it to the market. Some of the activities involved in distribution include packaging, transportation and delivery (Sonntag, 2020). As a result of globalization, the possibility for customers to purchase their products online and have them delivered to them at home, there is bound to be confusion regarding consumer products leading to the delivery of the wrong products to a customer. While this may happen often in the retail industry with consumer goods, occurrence of such incidents for electronic product that are big and significantly unique in description from each other such as the case in DOMESCO should not occur unless the inventory and stock holding technique being adopted is outdated.

Regardless, the possibility and frequency with which such wrong deliveries occur necessitates the development of reverse logistics and reverse distribution strategies. All Business (2020) describes reverse distribution as the process where products, often wrong products delivered to clients, are returned and move back from the customer to the manufacturer. Jamshidi (2011) points out that reverse distribution can be carried out in a separate and unique reverse channel developed by the manufacturer or in some instances through the original distribution channel used to deliver the products to the customer. Regardless of which channel is used by the company however, reverse distribution is presently a key component of the supply chain and should be involved in modern distribution and logistics strategies especially for companies capitalizing on online e-commerce sales, where customers will buy products without first inspecting and ascertaining that they are the products they are looking for.

Stock holding techniques

In the present most large companies take into account reverse logistics and make it an actual part of the supply chain with budgeting and planning so as to ensure the continued profitability and value of a supply chain. However, reverse logistics almost always consist of additional and unexpected activities which increase the cost of distribution and may lead to significant losses (Greve and Davis, 2018) as in the case of DOMESCO. Given that the right products required by consumers has to sometimes be rerouted from warehouses in different neighboring countries as a result of not being available within the customers country additional transportation and stock management costs are added onto the supply chain . When this happens frequently enough and in a large scale, the company has the potential of losing millions. However reverse logistics can be significantly minimized and even eliminated with significant inventory management and stock holding techniques.

Stock holding or inventory management involves the process of accounting for all manufactured products and assigning them storage and warehousing in anticipation of their transportation to the final customer. Melanie (2017) highlights that inventory management is a significant aspect for the success of a supply chain and distribution channel and often times, inadequate management procedures not only result in losses to the business but also customer dissatisfaction. While inventory management leads to effective product storage and handling within the warehouse, for it to be adequate and minimize any losses related to reverse logistics, inventory management has to take into account consumer needs and requirements as well as their purchasing strategies. Melanie (2019) asserts that purchasing decisions often have a direct impact on a company’s inventory control and management. With adequate data on purchase strategies and purchase information including the type of product that is prevalent among customers of a given geographical location, businesses and manufacturers can engage in accurate inventory control and management ensuring the desired products are available within the desired location in a timely manner. Ultimately, good purchase management practices by a company offers insight into what consumers want and need thereby streamlining the purchasing and inventory control processes. The ultimate outcome is a significant reduction of holding and transportation costs as well as a guaranteed replenishing of inventory levels in a timely manner leading to enhanced consumer satisfaction.

Economics of storage and distribution and Value Addition

Storage and distribution makes up a significant aspect of the supply chain with activities such as transportation and storage of product taking up space and time and therefore significant costs. Rodrigue (2021) asserts economies of transportation and economies of scale as the major players in the storage and distribution processes. While the transportation of products attract significant costs which the company has to bare as part of the business process and still make adequate profits, through bulk transportation for products, the cost of overall transportation can be significantly reduced leading to potential cost savings that contribute towards profit maximization. Similarly production and storage of products in large amount impact the economies of scale into the storage and distribution sector. The usage of warehouses and storage spaces can be adequately maximized to enhance cost minimization for ultimate profit margins maximization.

Adequate and effective use of storage spaces and areas lead to the maximization of the storage space usage which not only justifies the cost spent by a business on storage spaces in instances where they do not poses central/in-house warehouses, but also impacts value addition in the supply chain and the process of storage and distribution. In comparison to renting out a large space to store less than a large batch of products, renting out the space and using it to the maximum capacity for storage and distribution of products ensures optimum utilization of resources and therefore a significant degree of value addition and maximization. Ultimately storage and distribution are a key aspect of the supply chain with a capability of impacting the business revenue and profits in the present as well as in the future through adequate customer satisfaction which leads to continuous reliance to the company.

Conclusion

All the three parts tackled within this assessment seek to expand on the scope of the supply chain and how it can be developed to impact a manufactures costs and savings. Assessment one for instance, identifies a wide range of modern distribution methods including maintaining an in-house distribution warehouse and center and the storage operations within these distribution centers along with the legislations in warehousing. All of these aspects are significant in supply chain management and can be of significant impact to DOMESCO. For instance a major issue impacting DOMESCO includes inadequate warehousing strategies which lead to damaged goods and transportation of wrong orders to customers. Through streamlining the storage and warehousing activities, better care can be afforded to the products to limit the costs of damage and wrong deliveries.

The second and third assessments delve into warehousing techniques as well as inventory management and the connection between inventory control and purchasing strategies. There is a significant connection between the purchasing strategies and preferences of customers and the inventory control processes. Exploiting this connection can significantly minimize DOMESCO’s losses through ensuring the right customers receive the right products in a timely manner. Through adequate inventory control with the in cooperation of consumer purchasing data, the company can ensure the delivery of the right products into the right warehouses at the right time, in this way, consumer satisfaction is enhanced when they receive their ordered products without any mistakes or having to engage in the process of reverse distribution and wait a longer time to receive their purchased goods. In addition through adequate inventory management the company can limit the costs associated with second deliveries and reverse distribution. Being adequately aware of consumer preferences and purchase practices enables the company to take advantage of the economies of scale and transportation to further minimize loses.

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References

Allbusiness, 2020. Reverse Distribution Channels. [online] allbusiness.com. Available at: [Accessed 30 October 2021].

Greve, C. and Davis, J., 2018. Recovering lost profits by improving Reverse Logistics. [online] Ups.com. Available at: [Accessed 30 October 2021].

Jamshidi, M., 2011. Reverse Logistics. Logistics Operations and Management, pp.247-266.

Melanie, 2019. Purchase Management: What is it and Why Does it Matter? - Unleashed Software. [online] Unleashed Software. Available at: [Accessed 30 October 2021].

Melanie, 2017. 4 Effective Inventory Management Techniques - Unleashed Software. [online] Unleashed Software. Available at: [Accessed 30 October 2021].

Oberlo, 2020. What is Product Distribution? What Does Distribution in Marketing Mean?. [online] Oberlo.com. Available at: [Accessed 30 October 2021].

Rodrigue, J., 2021. Types of Economies in Production, Distribution and Consumption | The Geography of Transport Systems. [online] Transportgeography.org. Available at: [Accessed 30 October 2021].

Sonntag, M., 2020. Product Distribution Strategy: The Ultimate Guide [Infographic]. [online] Repsly.com. Available at: [Accessed 30 October 2021].