Pass 2 - explain the process of distributing goods through different channels from the manufacturer to the customer

In the last four hundred hears distribution methods have changed. This is because of changes in technology as well as how goods are now transported and stored. An example of an improvement to storage is that the products can now be refrigerated or even whilst being transported as well. Technology has changed distribution methods as products such as music and films are now able to be downloaded from the internet, creating a digital distribution method. Hard goods, perishable goods and digital information products all require different storage and transportation methods.
One of the most traditional distribution methods for transportation is by land – this can be either by lorry or by train. Land distribution is good for relatively short transport times (short and medium distances). It is also ideal for transporting heavy and bulk goods and is suitable for products with a long shelf life. On the other hand, land transportation doesn’t have very fast delivery times; this can be due to traffic jams, for example. It can also be quite costly because of petrol and maintenance costs and the land distribution will have a limited transport volume.
Another traditional distribution method is by sea. This is also good for transporting heavy and bulk goods but, unlike land transportation, distributing by ship means that there is no need for special architecture such as roads or airports. It is also a very low-cost form of transportation; however the delivery time can also be quite slow. This is because of customs and checkpoint restrictions and bad weather that causes storms can be quite problematic for boats, slowing down their progress.
Distribution by air is quite popular for delivering goods the same or next day, such as fruits. It is an economical and efficient way for the transport of lightweight, high-value products that need to be shipped over long distances. On the contrary, delivering goods by plane can be much more expensive than other forms of transportation due to maintenance costs and overhead costs. Air distribution will also require the use of a lorry to deliver the goods from the airport to the storage and distribution centres.
Due to improvements in technology, digital distribution is now becoming quite popular – this is because of the usually very quick delivery time when something is downloaded. Also products are sometimes cheaper to buy online rather than actually going into the store to buy it and digital distribution increases the reach of audience due to the easy methods of consumers sharing their finds on social networking sites. Nevertheless, digital distribution is taking over from traditional methods of transportation and distribution and although downloading products can be faster than waiting for it to be delivered to your home, higher quality goods such as music and films will take longer to download.

Lidl is a discount supermarket there they aim to deliver their products and consumer goods fresh on a daily basis. Their consumer goods that are non-food items are partly imported from Asia; these goods are transported to Europe by ship with the almost sole use of standard containers. The goods will then be loaded onto land transportation such as goods trains and lorries, which deliver the goods to the warehouses whilst taking full advantage of the freight capacity. Lidl focus primarily on German and UK production so they will only enter business agreements with German and UK medium-sized businesses. The transportation of goods is handled by their European distribution centres, allowing for the importing of smaller amounts whilst still maximising vehicle capacity. This ensures that the minimum amount of haulage is required on the road. By working with German and UK medium-sized businesses, Lidl have secured a good, steady supply of goods between warehouses and stores. A well-engineered route plan is used for daily delivery to the stores whilst lorries return materials from both stores to warehouses. Lorries that deliver to stores also plan to visit manufacturers along their delivery route so that they can take goods to the warehouses when on their return journey. By making this backhaul, the logistics are efficient and help in making their choice of logistics a factor in their success as it saves extra travel costs where the money could be used on buying more products, hiring more employees or improving existing stores, for example.
Lidl would be able to provide storage for both long term and short term products, as there is storage space available out the back of the store with refrigerators and freezers to keep the food and drink goods cool and frozen if they need to be. By having a freezer in the store, long term products can be kept there ready for easy re-stocking on the shop floor.

New Look is a British global fashion retailer with a chain of high street shops who’s target audience is mainly woman, alongside men and teenagers. New Look has two main distribution centres based in Newcastle-Under-Lyme, Staffordshire, who handle three million units of stock per week and work all day and every day. The distribution centres are large with extra floor space should it be needed. There is also a high degree of automation for both boxed clothing and hanging clothing. Products are brought to the warehouse from a wide variety of sources, including Eastern Europe, Turkey and the Far East. All the necessary tags (e.g. price tickets, security tags and labels) have been attached to the clothing before reaching the warehouse to increase the speed of when the clothing will be ready for sale. This task is usually completed in the country the clothing has come from however sometimes the goods will be prepared by Prima, New Look’s UK contractor. About 40% of the products that are taken in are arranged in ratio packs; these consist of the more popular sizes for that product. Some products will be sent straight out to the stores whilst others are put into storage, ready for replenishment. New Look manages deliveries from overseas suppliers where they buy their products using Freight on Board. A team uses the services of Allport, a freight forwarder, to manage the air movements, which are used when stock urgently needs to be flown into the UK. New Look also uses delivery by train and lorry when in the UK, and to increase the speed of delivery time the transport team delivery stock throughout the country during the night where there is less disruption to busy roads and stores. This use of logistics by delivering at night is quite successful because it reduces travel time and cost where they can be used on other things that could be more important.
New Look will use their storage space that is available in the back of their stores for short term products, for example the latest seasons stock. For long term storage and manufacture, the goods will be kept at a warehouse so as to not clutter the storage space in the store. A wholesaler or supplier will deliver their goods to one of New Look’s distribution centres, which will then be registered and sorted out. When stock is needed in a store the transport department will send drivers to deliver this stock to the store. A customer will then buy their product(s) in the store. If more stock is needed after this purchase, the information will be sent to the warehouse that will then send out more drivers to deliver more goods to the store, and the cycle carries on in this pattern. This is the distribution channel of New Look.

Argos is a British retailer that operates in the UK and Ireland. They also deliver to Spain. Argos’ goods arrive either straight from the manufacturer/supplier or from their own larger distribution centres. The products delivered can be new lines or replenishment of items already in stores, and when delivered they will be palletised or loose. A team then works to register the products on the warehouse management system (Triceps) after they have been put through quality control. Argos’ internal transport department selects a pallet and types in the information. Triceps then directs a forklift truck driver to one of the 50,000 storage locations in which to place the pallet. In preparation for the deliveries to stores, a Picker will be told which product location to go to and how many of those products should be taken to a specific loading bay. The system will then identify the best trailer type for the store and it is loaded with the new delivery by Argos’ dispatch team. The trailer is then moved from the loading bay to leave the bay free for the next trailer. Route planners liaises with the transport department so the drivers know where to go, what to unload at each store and if anything needs to be taken back to the warehouse. Whilst this is happening, a team in the warehouse re-orders stock to replace the goods that have been taken to the stores. To maximise efficiency, the drivers are sent to collect goods from Argos’ suppliers and bring them back to the distribution centre rather than arrive back with an empty trailer. This is called backhauling, which is a successful use of logistics because it reduces travel cost and the money can be used on other important things.

Amazon is an online retail store which sells almost anything. Its distribution (‘fulfilment’) centres are found throughout the world. These centres provide warehousing for third-party sellers as well. The warehouses are large where the employees are responsible for unpacking and inspecting incoming goods; placing goods in storage and recording their location; picking goods to make up a shipment; and shipping. A central computer records the locations of goods and maps out routes for the Pickers, who then take the products to the loading bay. The goods are then packed up and taken to a letter and parcel delivery company, The Royal Mail for example, who will then deliver the products to the customers. Amazon uses a very similar system to Argos, except the products are taken to a mailing company instead of to a store. Other mailing companies that Amazon uses are: Chronopost; Hermes; La Poste; SDA; UPS; Yodel.
On the Amazon website, a customer will order their products and this information will be sent to an Amazon warehouse. The warehouse then receives goods from a wholesaler or supplier and a team in a warehouse sorts out the customer’s order and sends it to the transportation team to deliver it to the customer. This is the distribution channel of Amazon. They use successful logistics as they tag the products and the consumer is able to see where the product they bought is located at that moment. This is an important factor in the success of Amazon.

Art & Frame is a local independent retailer found in Yate Shopping Centre. They provide professional picture framing for both homes and businesses. Art & Frame tend to store their goods in their shop, with both long term and short term items. They don’t have materials that only last a short period of time though, as most of their products are wooden or long-lasting plastics. They buy materials straight from the producer as well as through a wholesaler, depending on the product. The products are delivered to the store where they are then stored in the back of the store. The stock is replenished when it is necessary either as storage or on the shop floor. The distribution channel ends with the consumer buying a product or service that Art & Frame offer.