Skip to 0 minutes and 11 secondsYou might be wondering why we're discussing physical characteristics and why they are so important when it comes to designing a distribution network. Well, physical characteristics have a key influence on our design choices of the type of distribution network we want. For example, if we look at grocery retail and the items you buy in a typical grocery store, we have frozen items, such as a frozen pizza, and we also have chilled products like chilled tomatoes, chilled vegetables, chilled lettuce - and finally we have ambient goods, like cans of beans and boxes of cereal. So these three different types of products all have different physical characteristics, and because of that they need to be stored differently and transported differently.
Skip to 1 minute and 3 secondsThe frozen burgers or pizzas would need to be transported in a refrigerated vehicle that can actually keep the products frozen. That means that the vehicle needs to be insulated with very thick walls and have some sort of refrigeration unit attached to it. When we come to chilled products, like lettuce and tomatoes and vegetables and so on, we could use the same transportation and the same storage, but we wouldn't be able to store the frozen and the chilled together. This is resolved in the real world by partitioning up chilled and frozen storage, and usually with the use of partitions of insulating material.
Skip to 1 minute and 44 secondsThis separation of chilled and frozen can happen in the same vehicle or the same storage unit, but some distribution businesses totally separate them so that they only have a frozen storage centre or only used frozen trucks, because it's easier than swapping the temperatures backwards and forwards. With ambient goods, the storage and the transport only needs to ensure that goods are kept dry and secure. So this is a lot easier to manage, compared with a frozen or a chilled distribution network. So obviously running a frozen distribution network or a chilled distribution network is a lot more expensive and more complicated than running an ambient network.
Skip to 2 minutes and 34 secondsThere's all sorts of regulations with chilled and frozen, mainly because those types of distribution centres are for food, and there are many many rules and regulations about food. And we have to think about hygiene, as well as the fact that the packaging has to be undamaged and not opened, and so on. When it comes to an ambient network we're just looking for the damage of products, so we just need to handle them properly so they don't get damaged, cans don't get dented, boxes don't get crushed and so on. So this is a lot easier to deal with than making sure that your frozen warehouse or your frozen vehicle is at the right temperature.
Skip to 3 minutes and 16 secondsSo it all depends on the product and the operational requirements of the distribution network.
Relating physical characteristics with distribution network choices
We can now visualise that every product with similar physical characteristics has a unique supply chain with its own logistics tailored so the goods can be moved, stored and preserved.
In the video, Nick Wright uses the example of grocery items (frozen, chilled and ambient items) to illustrate the key influence of physical characteristics on distribution network design.
However, it is important to note that this does not mean every product has its own supply chain; shared physical characteristics mean a shared network.
A good example is dairy products such as cheese, milk and yoghurt.
- Dairy goods come from farms and cows
- They all need to be kept chilled to preserve them
- Dairy products are all a similar size and have similar handling characteristics
- Their packaging must be hygienic to assist handling and give consumers the confidence that the product is edible
- This means that logistics resources and assets can be shared throughout the supply chain
Consider the physical characteristics of your grocery shop – and how the goods get to the store.