Warehouse and Distribution Channels

Question: Discuss about theWarehouse and Distribution Channels. Answer: Introduction Comprehensive markets high competitiveness necessitates the companies to be concerned in a supply chain for staying competitive. The flourishing execution of supply chain management (SCM) is important to universal competitiveness. However, organizations would be facing more challenges in order to succeed in SCM, as supply chain comprises of number of organizations level in each chain level like manufacturers and customers having different objectives. In the system of supply chain, networks of distribution throw in significantly to performance of supply chain. Distribution networks play an important role in responses of customers and capability to distribute products from the house of manufacturers to gratify requirements of customers like lead-time and availability of products identified as key stricture in competitive market. Distribution networks are largely intended to flow the goods through paramount arrangement to fill the demands of customers with minimum entirety cost. This pa per would look into the issue of high transportation cost and its effect in the Australian sector and the possible ways if lessening or eradicating the issue. As per Hollensen (2015), long channels of distribution mostly produce high costs of distribution and long time of delivery, which are consequent from the long channel of distributions characteristics. Performance of long distribution channels may be developed by lessening the costs of distribution and time of delivery. In the context of long channels of distribution, the distribution network structure configuration are stated as systems that comprises of single or multi-production plant and multi-retailer. According to Christopher (2016), the multi-tier distribution significantly useful in long channels of distribution have similar kinds of objectives of warehouses in fulfilling the requirements of consumers with regards to quantity of demand and lead time in broader areas of market. Adding further warehouses needs to be decided by allowing for the trade-off of certain variables as usage of more warehouses increases cost of inventory, carrying and warehousing while on the new tender would diminish costs of transportation. Transportation and costs of logistics have become decisive mechanisms as products are dispersed in an extensive distance with different vehicles along with transitions in many sites with diverse capabilities. The distance that exists between nodes and activities in each level makes transportation and logistics very decisive. The time length that is being used in the process of distribution affects to augment the costs associated with logistics and transportation. Expenditure incurred in each one supplementary transit day would amplify about 0.8% to the final costs associated with goods (Xu, Cheng and Huang 2015). The costs of logistics and transportation can be lessened through usage of different alternatives of means of transportation like full truckload, train, sea vehicles and less truckload. In view of a range of facilities that would offer larger options to amass and transport the products either in smaller or larger quantities depending on the amount of quantity and providing potential ways to diminish cost of distribution without losing the potential demand. In recent times, the costs of transportation have been very high with the organizational management striving hard to adopt strategies that would assist in identifying transportation issues in supply chain and developing issues to answer those problems (Litman 2016). For most of the multichannel merchants, en identified as the highest operational outflow. According to Johnson (2014), costs related to inbound freight for products that are domestically sourced ranges between 2-4% of the gross sales, whereas for imported products the inbound costs range from 6-12% of the gross sales. These costs have been going up all the time. A few while back, FedEx announced an increase of 6.9% in its net shipping rate average for FedEx Express, an offset by 2% reduction in surcharge of fuel and a net increase of 5% on paper. According to Roni et al. (2014), a prominent factor in the costs of transportation, is the imbalance that exists within the demand-supply of services related to freight transport is a consequence of growth in trade that has outpaced the transport service availability to an extent leading to serious blocking and capacity constriction. There has been a momentous drop in the volume of total freight during times of recession, but with improvement in economic conditions, the volume of freight is likely to grow to 68% by 2040 (Cheng and Tongzon 2014). Bilateral and multilateral agreements in transportation have often involved in complex negotiations in Australia seeking to safeguard their interests and creating chances for the purpose of economic growth (Roni et al. 2014). The participation of carrier entry is being restricted in certain markets, for which the rates tend to get higher. In Australia there has been an augmentation in the prices of transport that has directly affected the accessibility of goods and services. The rise in the transportation costs has witnessed a rise in the prices of goods and services as the manufacturers have to channelize that added costs to minimize its effect on the profitability factor. All this adversely affects the demand of products and services in the Australian sector, affecting its economy on the way. Increase in price of products due to the high transportation and logistics cost might reduce having less impact on the supply factor. Greater price has the ability to increase the revenue fact or of organizations given the fact that demand is stated to be fixed. The transportation impact is not always intended and might come up with definite unanticipated or inadvertent consequences. For example, congestion is frequently being seen as an unplanned consequence in the stipulation of free or low cost transport transportation to the consumers. As per Australia (2014), increase in the cost of transportation and logistics have often forced organizations to deliver fewer amounts of goods in the market, thereby increasing the demand for that particular product and finally increasing its price, especially if it is a product of necessity. Write-offs of products can take place if sales channels are being over-supplied with under-supplied channels of sales can impact negatively in the outline of missed opportunities in sales (Eriksson et al. 2014). Australia has been highly affected by the hidden costs of transportation in some of the organizations poor supply chain. Enterprises in Australia like Walmart and ASDA have been getting goods from one point t o another that has become a crucial feature of the retail business, ensuring that the process becomes an efficient one having huge economic concern. Certain strategies might be recommended in dealing with the issue of high transportation cost. In an organization, it is up to the purchasing department to streamline vendors for gaining better prices with larger volume, whereas, the transportation manager needs adopting similar strategies for the number of carriers used. A transport manager should be entitled with finding the best carriers at bets prices, which sometimes may lead to usage of bigger number of carriers, notwithstanding offering exceptional service. In lessening the number of carriers, the quantity of work provided to enduring carriers would increase. Through offering larger work volume, carriers should be able to provide lower rates athwart all routes. As carriers are being offered more amount of work, the rates that have been negotiated should decline more because of the fact that they would want in all probability to retain those routes they possess along with increasing the work volume they are receiving. An import ant factor is that there should not be any delay regarding delivery of goods to paces of requirement or else the company might encounter financial consequences and a drop in the satisfaction level of consumers leading to lower orders in future. More number of carriers incurs more costs related to maintenance, fuel and driver wages and salaries. A company when using carriers for their deliveries, the fee they pay is consulted by the trip identified based on distance, weight and certain other variables. Transport managers might consider consolidating shipments for engaging fewer trips, thus enabling the company to reap out more benefits of low rates on bigger shipments. Consolidating the shipments would mean that the transportation managers would require shifting from less than truckload (LTL) shipments to truckload (TL) shipments. This strategy might not be viable all the time but with availability of discounts on bigger shipments, the transportation manager might be motivated to focus on the strategy for reducing costs. Some organizations believe that the best bargained prices can be attained through usage of single basis for all their transportation. This is a common factor with the purchasing departments using a single source for wide products range that a single vendor can offer. For transportation too, the same can be achieved. An organization can offer its carriers with comprehensive explanation of the things they require, going beyond the normal limits at times offered by a common carrier. Using of a single source needs the organization to access the bidders capability of offering service and its stability in financial segments within the contract timeline. If the winning bidder can provide the organization with the things it requires, a company can achieve noteworthy savings in transportation related to its supply chain matters using a single carrier. The distribution channel management helps in reducing the costs of distribution through making transactions a routine affair. Exchange relationships can be unvarying in terms of delivery frequency and communications along with payment process and inventory size. 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