8. Distribution and Transportation Network Design

This chapter addresses basic strategies for the configuration of physical distribution and transportation networks so that given supplying locations are physically connected with demanding locations. In the beginning, a case study concerning the challenges related to the installation of transportation links is discussed. The next section suggests generic types of transportation network setups as a starting point for the setup of more sophisticated network layouts. Subsequently, the concept of shipment consolidation as the key approach to the realization of economies of scale in transportation is considered. Additionally, different transport network configuration objectives and their balancing are analyzed, so that efficient and profitable network layouts can be set up. The incorporation of transport service providers (freight carriers) is discussed. Finally different case studies regarding distribution network design are presented and the concepts, models, and principles are discussed with numerous examples such as distribution and transportation strategies at global retailers. The chapter is accompanied by an E-Supplement providing additional case studies, Excel templates, tasks and video streams.

In Chap. 7, we discussed the identification of appropriate facility locations. The SCOM theory states that the interactions of several facilities and their common activities have a crucial impact on the success of a supply network. Therefore, the linkage of these facilities also plays an important role in the SC configuration phase. In this phase, key decisions related to the availability of facilities have already been made, but their physical connections through the installation of appropriate transportation links has not been addressed yet.

In this chapter, we will discuss basic strategies to configure distribution and transportation networks so that given supply locations are physically connected with demand locations. In Sect. 8.1, we introduce a case study to discuss the challenges related to the installation of transportation links. Section 8.2 introduces generic types of transportation network setups as a starting point for more sophisticated network layouts. Section 8.3 introduces the concept of shipment consolidation as the key approach to the realization of economies of scale in transportation. Section 8.4 is dedicated to the presentation of different transport network configuration objectives and their balancing so that efficient and profitable network layouts can be set up. Section 8.5 surveys the optimization of the incorporation of transport service providers (freight carriers). Section 8.6 is devoted to different case studies of distribution network design.