Addressing shortcomings in goods distribution : A case study of a collaborative distribution network

University essay from KTH/Skolan för industriell teknik och management (ITM)

Abstract: In the increasingly frequent distribution of the Fast-Moving Consumer Goods (FMCG) industry, there is an evident need of improving supply chain operations to ensure sustainability. As part of the supply chain, the distribution of goods often accounts for a major part of costs and resources. Therefore, focus needs to be directed toward ensuring a continuously functional distribution network. Performance measures of high asset utilization and high customer service level are often contradictory to some extent, making the improvement work even more complex. One way of increasing the performance of distribution operations is to take part in an interorganizational collaboration. The purpose of this master thesis is to investigate how the distribution operations of a FMCG company connected to a collaborative distribution network could be improved. Through a single case study, the researchers identify shortcomings in the distribution operations of a cross-docking network with a focus on a specific customer segment flow. By using concepts of demand management, supply chain collaboration, and customer satisfaction, the findings are analysed to highlight shortcomings in the distribution. Researchers discuss how distribution performance consequences could be related to certain managerial actions by presenting three different scenarios. The scenarios show a distinct effect on the number of shipments conducted towards cross-dock. As the number of shipments are reduced, economic benefits could be realized. However, these benefits must be carefully compared with the potential reduction in the level of customer service. The conclusion of this study suggests that managerial action is necessary to increase the economic sustainability of the distribution.

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