Distribution Strategies Advantages And Disadvantages

3.3. Distribution Strategies

3.3.1. Direct shipment

Direct shipments bypass warehouses and distribution centres.

The advantages and disadvantages of this strategy, according to Kaminsky et al. are as follows:

Table 8: Table demonstrating advantages and disadvantages of direct shipment Advantages Disadvantages

Direct shipment 1. The retailer avoids the expenses of distribution centre operations

2. Reduces lead times 1. The retailer may face risk-pooling effects

2. Transportation costs increase because smaller trucks must be send to various locations

It is for the above, tabulated, reasons that it should be noted that direct shipment is a commonly acceptable method to use when the retail store requires that the trucks be fully loaded, thereby

• Enhancing strategic growth: where a partnership may enable a firm to pool expertise and resources to overcome high entry barriers.

• Enhancing organisational skills: where alliances provide great opportunities to help elevate organisational learning.

• Building financial strength: where alliances can help generate more income while sharing and administrative costs shared while limiting investment exposure by sharing risk.

Although strategic alliances seem appealing as they would ultimately be put in place to release firms of the pressure of managing every aspect themselves, and can now focus of their core competency; companies should be weary of not being weakened by their alliances, which is a possibility if resources are diverted from these strengths or if technological or strategic strengths are compromised to make the partnership successful.

Although strategic alliances are becoming increasingly widespread, there are three particularly which are particularly significant in supply chain management:

• Third-party logistics (3PLs)

• Retailer-supplier relationships (RSPs)

Best practices to apply with 3PL

Businesses can opt to get their products shipped from one place to another by working with third-party logistics providers (3PL). Shippers are then assured that their products will arrived on time and these services will free them up to focus on their main business.

There are some best practices to follow when it comes to work with a 3PL and build a successful relationship according Savtrans (2011) and Dittman (2016):

Which 3PL to choose?

At first the company has to identify its needs in terms of outsourcing its logistics. Once the requirements are clearly defined, it will be easier to find a 3PL that will fit to these requirements. The company should also select a 3PL which is already quite familiar with the industry and the region where products need to be shipped.

Define expectations

Once the provider identified, the company has to outline its expectations in terms of processes, tracking, KPIs,