Advantage through Distribution Networks

How to achieve a competitive advantage through Distribution Networks

After the lesson on distribution networks, I researched to complete the training a bit more and I found how to obtain efficiency on the distribution.

“The success in the market and the competitive advantage depend on distribution network”

Without efficiency in distribution networks, the success in markets and obtaining a competitive advantage could not be achieved. This is why it’s necessary to get a balance between the maximizing customer service, the minimizing transaction costs, the investment made and the risk. A solid strategy is vital to align the decisions and actions with the objectives, but at the same time, it’s interesting to take into account some of the principles applicable to the design of the distribution networks, beginning in its preparation stage, where the bases for efficiency are laid.

Previous steps in the design of distribution networks

Before defining the applicable model of distribution networks and their different scenes, it’s essential to start with these 6 steps:

Definition of the scope
It’s crucial not to lose alignment with the evolution of the business and the transformations that implies. The distribution chain and its processes must adapt to the sales volume, the number of customers, the variety of products, the different markets where it works, the particularities of the business and the requirements applicable to operations.

Identification of the limitations
Every project suffers from restrictions and especially talking about the logistics chain. Storage capacity, budget limits, handling requirements of each product, transport conditions, availability or risk tolerance, among others.

Establishment of objectives
Justifying the investment and adapting to the service requirements. The objetives must be concrete, achievable and realistic. Generally, are grouped into two categories, goals related to the reduction of costs and strategies related to improving the service. Among the former, the rationalization of inventories, the minimization of storage costs, the reduction of transport costs or the adjustment of labor costs are frequent; On the other hand, the latter refer to performance or the flexibility.

Study of the environment
This analysis allows to detect opportunities and threats. Being a hard struggle, which implies a high consumption of effort and resources, it is a necessary step for the elaboration of the strategy and the optimization of the design of the distribution networks. Among the data collected, are the complete description of the distribution goods, the historical records of operations, the applicable transport rates and their conditions, the addresses of suppliers and customers, the service requirements and the applicable legal regulations.

Must be carried out in order to forecast the growth of demand, inventory needs and trends that will influence the management of the distribution chain; so that the actions to be taken can be planned.

Selection of distribution network design tools
In the market there are different possibilities of solutions to design a network of this type. In the election, it should find that the selected tool includes softwares with database analysis capabilities, calculations applicable to transport optimization, specific applications aimed at innovation to improve customer service or simulators that allow greater dynamism and precision in decision making.

With these steps we can design an optimized distribution network model that will always be subject to revision, to guarantee its updating and suitability in the business conditions.

Logistic in Lidl

This blog will be my first writing in logistics at MGEPS at UPV , so as we in this course to talk about logistics in our life and i noticed that many of the ones writes about The logistics in Mercadona and Consum , so i decided to write about the Logistics in Lidl .


Lidl is a German chain of discount grocery stores that operates in numerous countries across Europe, in UK alone Lidl have about 568 outlets / supermarket stores. Lidl’s largest market is Germany where it competes with fellow German discounter and arch rival Aldi.

Lidl  now they have over 10,500 stores and in 28 European areas, Lidl is a leading supermarket chain in the food distribution sector delivering fresh, quality produce across the UK with employing some 400,000 people.

i will focus on Lidl warehouse operations , there is a lot of jobs that are behind of product you see in the supermarkets .

watch out this video : Lidl Warehouse Operations

How do they differ from using  pallet networks and what are the advantages of using this  services?


they are one of only a few freight companies offering a truly one-stop-shop logistics solution for suppliers to the supermarket groups they serve, an integrated, timely, cost effective logistics service, If there are delays at point of delivery, they wait until it can be tipped, they do not pull out of the RDC due to delays and do not charge demurrage.

Direct Deliveries & Warehousing Group-age Services

warehouse is an exciting place to work because it sell million of products out each day , everyday they have this following process :

provide full trailer load & part load (group-age, consolidation, LTL) deliveries to Lidl in the UK.  These distribution services are supplemented by differing range of warehousing services:

  • Container De-stuffing
  • Palletisation
  • Pallet Racking
  • Reworking of Pallets
  • Pick and Pack
  • Labelling & Bar Coding
  • Printing of Delivery Notes
  • Part & Full Load Delivery
  • Storage of any rejected Pallets
  • Internal Storage of empty Pallets
  • Consolidation of rejected loads & pallets for an economic return to the manufacturer/supplier.
  • Delivery to food banks

Disadvantages of using Pallet Network system

  • Pallet deliveries are expensive
  • Haulier will not wait past 30 mins of booking time
  • Goods get returned to hub and customer is charged for outward and return journey
  • Goods need to be re-booked, customer receives notice of delivery failure
  • Charged again for re-delivery


Operational Information –  Lidl Warehousing:

  • Deliver to each RDC six days per week
  • 9 Loading / Offloading Bays
  • 24/6 with Sundays 8-5pm
  • Drop Trailer facilities
  • Repack, Restack, Invert, Relabel facilities
  • Warehouse based in Warrington, Cheshire
  • Warehouse 45 minutes from Port of Liverpool
  • Proof of Deliveries all have the customers logo on

Rejection of Full Loads at Lidl RDC’s

In the event of direct deliveries in FCL or FTL getting rejected at a Lidl RDC, they provide regional repack, re-stack & re-delivery services near to every Lidl RDC in the UK. This allows Lidl to take off what they are happy to do so and prevents the whole load getting rejected. then work with the shipper/importer etc. to find a local solution to allow fulfillment of the order.

regional warehouses are located strategically throughout the UK & Ireland. partner warehouses provide repack/restack / re-delivery services in locations near to every Lidl RDC in the UK & Ireland.

container & Trailer Services – Suppliers to Lidl

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they work together with shipping lines and merchant hauliers to try and avoid quay rent. This is especially important during “specials” where high volumes combine with short lead times.they operate a drop and swap system to ensure maximum efficiencies in terms of shunting to and from the Port of Liverpool , also work with line & merchant haul from other UK Ports.
Services below:

  • Customs Clearance
  • Duty Deferment
  • Inland Haulage
  • Full load collections from Europe


In the phase before the products reach the store, IKEA distribution service makes sure all goods are transported from suppliers to stores. However, once in the stores, logistics handles the off-loading and arrangement of goods.

IKEA was founded in 1943, in Sweden. IKEA focused on offering a wide range of good quality, stylish, well-designed, and functional furniture at a low cost so that more people could afford it. IKEA kept cost reduction at the center of any decision making. It made efforts to improve its internal supply chain processes like packaging, warehousing, and transportation which contributed to its cost cutting objective.

IKEA’s supply chain management became the key factor for the success of the company. As a result, IKEA managed its costs better than its competitors and could offer products at 30% lower costs. Nowadays, we can say that IKEA is expanded around the world, by the year 1990, it had 89 stores in 21 countries, and it was operating 260 stores in 36 countries in 2008. At IKEA, thousands of products are handled daily. The movement of goods must be as efficient as possible, under all circumstances, guaranteeing service to our customers and ensuring that the products they seek are always available to buy. Jobs in logistics account for about 20 -25% of each store’s co-workers, all of whom

provide a vital link in our operations. Our goal is to be in full control of the space and the volumes of goods in order to maintain uninterrupted sales.

The sheer volume of goods coming in and out of each IKEA store each day makes running a logistics department an enormous challenge. A manager in this area drives the cooperation between the sales and logistics departments, knowing how to exploit every cubic meter of space. It is also the manager’s responsibility to supervise the ordering of products to the store, ensuring the correct quantities are acquired.

Where IKEA’s most innovative process comes from combining their retail and warehouse processes. Almost every store has a warehouse on the premises. This helps the company reducing transport costs. For example, imagine when someone selects a piece of furniture to buy. The item is then ordered, shipped from the manufacturer, moved from the delivery truck into storage in the warehouse, moved from the warehouse to the customer’s vehicle or delivered by the furniture retailer to the customer’s home. Every time the product is shipped, moved, and loaded, it costs money. IKEA does not have to do this as they all their products under one roof which is accessible to their customers

Sustainable Relationships with Suppliers

A key part of IKEA’s success is credited to its communications and relationship management with materials suppliers and manufacturers to get good prices on what it procures. Although Ikea fosters competition among suppliers to ensure they attain the best prices and materials, it believes in making long-term business relationships with them by signing long-term contracts, thus lowering prices of products further

 IKEA is a very high-volume retailer – it buys products from more than 1,046 suppliers in 52 countries and uses 42 trading service offices around the world to manage supplier relationships. They negotiate prices with suppliers, check the quality of materials, and keep an eye on social and working conditions.

The duties of the logistics personnel are to monitor and record deliveries, carefully check delivery notices, sort and separate the goods, and get them off to the correct sales area or designated overstock locations. Overall, they ensure an efficient flow of goods within IKEA stores, which is essential to maintaining high sales and enhancing customer loyalty.

AI in Inventory Management

             “Managers tend to overcomplicate the process and the tools, but most of the time the real benefits lay on simplifying the process and getting accurate data about the stock.”

Following an interesting course about Inventory Management, we received this phrase in a conclusion e-mail, that made me think. Indeed, there is no real solution or framework to optimize perfectly your inventory, unless you know how to predict the future and therefore I would love to meet you.

However, my interest into Data Analytics and AI resurfaced, as it’s the type of problematic that this scientific field is trying to solve during the last 20 years. The fact that there is not an all-done solution for Inventory Management, is because information is always lacking. Therefore, how can we get this information? AI, indeed, can be a great help.

The most talkative example here (of course…) the giant of retail Amazon. They developed many tools that help them to manage better their inventory, hence having the possibility to make it grow.

Inside the Warehouses: Automating and Monitoring Inventories

When a company is in the field of retail, movements inside warehouses and number of goods are growing exponentially. It’s humanly impossible to make no mistake and follow perfectly everything: thus, Amazon developed Kiva (see picture below), a small automated robot that move pallets of goods inside the warehouse in an optimized way, reducing human needs & enable the tracking of movements.


Demand Forecasting for Inventory Management:

              Automating the movements inside your warehouse will give you more information about the present activity of your inventory; but the greatest challenge of this century is to be able to predict the future.


Let’s imagine that you are an important water bottle supplier, and that you faced stock shortage during a heatwave this summer. A way to prevent this kind of event is to try to analyse your sales throughout a determined time framework, taking also into account pertinent variables, such as the temperature. Therefore, you could develop an ordering policy depending on the weather forecast and optimize even more your stocks.

This AI field related to this type of problematics is Time Series Analysis, which is also extremely used in the stock market and high-frequency trading.


If you are interested to have more insights about Time Series Analysis, I advise you to take a look at this video, that will introduce to the theory of this concept.

              To conclude, we can clearly state that AI have been developed to solve knowledge management problems, that have been and will always be an issue. However, thanks to this technology decisions are taken with more insights, and show the power of the symbiosis between humans and machines.


Inventory Management techniques And Logistic

– Inventory
– Inventory Management

All organizations have some level of inventory which must be properly administered because they represent capital. High operational costs provide strong motivation for discerning organizations to have greater inventory management control. Various organizations have employed the basic inventory management techniques or inventory control methods to keep their inventory costs in check. This section we will review the most of techniques used in inventory management.
1- Economic order quantity (EOQ)
The EOQ models are based on a continuous-review policy and they assume that the inventory can be monitored every moment in time. In practice this is implemented by a procedure to monitor the inventory each time a change occurs. Then, if the inventory has reached a threshold, the replenishment decision will occur. the inventory management needs to be organized in a logical way so that the organization can be able to know when to order and how much to order. This must be attained through calculating the Economic order quantity.

2- Just in time technique
Just – In – Time inventory is generally regarded as an efficient inventory management system. The JIT concept of production was introduced in Japan under the name of Kanban. concept material and components are supplied to the work station just at the time they are required for use . The main purpose of using this method is to avoid waste overproduction, waiting, excess inventory, total quality control and devotion to the customer. characterizes JIT as a process that is prepared for moment response to the request without the necessity for any overstocking, either in the desire of the application being approaching or as a concern of improvident characteristics all the while.

Is a supply-chain initiative where the supplier is authorized to manage inventories of agreed-upon stock-keeping units at retail locations. a VMI supplier has the liberty of controlling the downstream resupply decisions rather than filling orders as they are placed. Thus, the approach offers a framework for synchronizing inventory and transportation decisions. And identifies that upstream information exchanged to suppliers such as the current stock level and precise deals conjecture is the most vital element for the effective usage of Vendor Management Inventory.

4- ABC analysis
ABC analysis is the most popular technique used in Inventory Management, base on classify item into 3 types from A: (very important items), B: (moderately important items) and C: (relatively unimportant items), they talked about problem of these type of classifying problem in ranking.



Dariy 2 distribution of network

Key words:

Internactional comercial, Warehousing, Inventory, Customer-based, Servution System

Distribution of network is about knowing what is service and what is the know-how. The whole logistic supply chain is serving around targeted customers or the end users’ need by finding out features which could impact customers purchase behaviours .The marketers  are supposed to keep it in their mind firstly.

Those brick-and-mortar stores are taking into account how they can make transit with customers by performing :

1.response time

2.product variety

3.product availability

4.customer experience

5.time to market

6.order visibility


ALDI, the famous known supermarket,could be used as a metaphor like a mini society supply chain , who performs the intermedia agency to meet customers need by delivering food and  providing great value and quality. Since opening its first store in 1913, ‘To provide our customers with the products they buy regularly and ensure that those products are of the highest possible quality at guaranteed low prices is their business concept. Aldi’s products are sourced from hand-picked suppliers whose products are sold under Aldi’s own brand labels. Why customers get use to buy food in supermarket instead of going to those huge warehouse, it could be answered that supermarkets business model called Servution System.

Customers can have auto-service by themselves when they are selecting articles without any employees next to them.In the same time, staff in supermarkets are prepared to help solving  customers’ doubts. During the purchase process, product variety are available in shelves that’s why customers could spend time looking around the products and having a good shopping experience. Likewise, supermarket stock is for storing food and manage the products quantities if it’s still on stock or sold out, for refilling the shelves and meet customers gratifacation.

Distribution network can easily be modeled and gain benefits:

1.reduced unessary cost of distribution.

2. enhance customer satisfaction and improve its service.

3. understand cost of service, transportation, and warehousing .

4. maintain inventory stock and market need.

Supply chain management is a transport process by carrying out the goods to customer and customer. As for manufacturer, trading companies are their main customers,while retailers are the main target customers .The end user can meet their desire of wanted products in shop. It’s about Need of Things.

In the era of globalization today, Asian countries have increased the number of amout of exportation .They are making a great progress of being a huge fatory market and making a great contribution of distribution of network. Those mergered developing countries produce the wanted goods and ship them by ship, by air or by truck. This transport process establish the base for suppliers and retailers to allocate their products to customers. They are not visible as the product availability in a supermarket, but it does implement achieving customer service and meet customer needs.

Green supply Chain Management

The Green Supply Chain Management is also called as “Supply chain sustainability” this direction that became a trend now in the business life of supply chain management, this stream has been building up in recent years, as the consciousness of consumers about the environment has been increased. Now the companies should also take the same step and become more environmentally conscious and from this point, the trend of the green supply chain has been aroused.

If we Looked at most multinational corporation’s web pages today, you will find dozens of pages on how the company is also looking to make the world a better place. The initiatives stretch throughout the value chain, from packaging to transportation and waste management. In the Following link you can know more about Green Supply Chain

Green Supply Chain and Technology

There is significant evidence that there are points to the ongoing greening of the supply chain all over the world, which is driven by technology. Cleaner ships, trains, planes, and trucks combined with automation and clean technology introduced into cargo handling and warehousing operations are accelerating. And environmental policies at national and regional levels are driving investment and green compliance on a global scale.

The Case of Kodak: Green Technological Advancement

Since the early 1990’s, the need for technological advancement to Green Operations is becoming more popular. The ‘new economy’ has encouraged firms to be more environmentally sustainable and eco-efficient. Kodak is an example of a company that has a re-manufacturing line to the supply chain. It is reported that 310 million single-use cameras have been returned since 1990. Although the timing of returns of single-use cameras are unknown, Kodak has managed to allocate 310 million single-use cameras back into their production line. The reason for this success came from its own product design. Kodak’s single-use cameras are simple, reusable and easy to recycle, and because of this, Kodak has managed to reuse their products and save costs. Xerox Europe, US Naval Aviation are also good examples of Green Operations. Companies are encouraged to have Green Logistics due to various legislation.

Actions towards the Green supply chain Management (GSCM)

At 2018, UPS announced it would add additional compressed natural gas (CNG) fueling stations and add 390 new CNG tractors and terminal trucks and 50 liquefied natural gas vehicles to its alternative fuel and advanced technology fleet which has more than 4,400 vehicles. As a result of using more natural gas for its ground fleet, in 2016, UPS decreased CO2 emissions by around 100,000 metric tons.

Also, as more inner-city deliveries are made like, FedEx, UPS, DHL and other delivery providers are parking their gas guzzling vans and instead are turning towards electric vehicles, boats and bicycles

Moving forward, we’ll see more emphasis on reusable packaging also not only transportation. DHL, FedEx and UPS all offer reusable packaging but more is still needed.

With the increased attention paid to Green Supply Chain Management (GSCM) responsibility , a growing number of firms have explored “greening” (environmental-friendly) initiatives as their competitive strategic weapons

For Example In Europe, Germany and the Netherlands are leading the way with ongoing investments in green transportation and automated ports. And not least, the headlong push into supply chain software solutions is eliminating efficiencies and congestion that directly reduces energy and fossil fuel consumption.

Why Change to Green Supply Chain Management?

There are different thrusts for companies to change to a ‘greener’ supply chain than the existing one. Some organizations are simply doing this because it is the right thing to do for the environment even though some of the motivators are quite unclear.

 Studies, however, reveal that profitability and cost reduction are some of the main motivators for businesses to become ‘green’ in the supply chain. Advertising took this idea further and argued that Green Supply Chain Management practices are only about ‘win-win relationships on environmental and economic performance’.