APICS Operations Management Body of Knowledge Framework, Third Edition

3.5 Distribution

Distribution centers around the activities associated with the movement of material, usually finished goods or service parts, from the manufacturer or distributor downstream to the customer. These activities include transportation, warehousing, inventory control, material handling, order administration, site and location analysis, packaging, information systems, and communications networks.

3.5.1 Modes of transportation

Choosing a method of shipment is a critical decision for distributing products. The basic modes of transportation are highway, rail, water, pipeline, and air. Each method has its own trade-off between costs and benefits that must be considered, such as freight charge versus time to move.

3.5.2 Channels of distribution

Channels of distribution are any series of groups or individuals that participate in the flow of goods and services, from the raw material suppliers and producers to the final users or consumers. The terminology is used to reflect the intermediate companies and steps in the distribution process. For example, items can be sold directly from the manufacturer to the consumer, or they can be sold though a wholesaler, distributor, or retailer to reach the end user.

3.5.3 Cross-docking, break-bulk, and unitization packaging

Cross-docking. Cross-docking is a distribution technique in which items are brought into a distribution center for immediate dispatch. Instead of being received and stored away, these items are loaded into the distribution center’s sorting system or are taken directly to shipping for sorting and dispatch. This may require the vendor to perform some additional value-added step, such as hanging garments on hangers, repackaging the item for easier sorting, or adding labels such as a price tag to the item.

Break-bulk. Break-bulk handling is dividing truckloads of homogeneous items into smaller, more appropriate quantities for use. In trucking, this consists of loading many shipments into a truck destined for a specific location. The freight is then “broken” to other trucks headed to additional destinations until it arrives at the local destination where it is “broken” to a local delivery truck.

Unitization packaging. Unitization packaging is the consolidation of several units into larger units for fewer handlings, such as placing items in boxes loaded and wrapped as a pallet. In terms of distribution, unitization will cost more because of the additional packaging, but this cost can be offset by the savings from shipping one large unit versus many smaller units.