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Summary
The goal of this research project is to explore the impact of recent trends and developments on the logistics choices companies in the printer/copier sector make, concerning their European distribution. This requires an analysis when these trends and developments might cause these companies to opt for a different distribution structure than currently used. This leads to the following research questions:
Is there a blueprint for the European distribution of companies in this sector? What are the possible alternative distribution structures that can be chosen?
Which recent trends and developments have an impact on the logistic activities of companies in this sector?
What are the effects of these trends and developments on the different distribution structures? When might these trends and developments cause the choice for a different structure than currently used?
Interviews with companies in sector and literature research show that the most common form of distribution (the blueprint structure), in this sector is the 2-tier structure. The term 2-tier refers to the 2 stages of storage in this structure. The products, that are mainly produced in Asia, are transported per sea freight to Europe. From the point of entry (harbor) they are shipped to a central distribution center, also called a European distribution center (EDC). The EDC ships to the
surrounding customers and to regional distribution centers (RDC’s) for the markets further away. The other possible forms of distribution, acquired from literature, are:
The centralized structure, which has one central warehouse, but no regional distribution centers. Thus all the customers are serviced from the EDC.
The decentralized structure, which only has regional warehouses, which are directly replenished via separate harbors in close proximity.
The 2-EDC structure. This distribution structure resembles the centralized structure, only there are 2 central warehouses. Each of these EDC’s services a part of Europe, splitting Europe up in two parts.
Direct factory delivery. In this case customer are directly serviced from the production facility. This could also be combined with the other possible forms of distribution, where the production facility also services the warehouses.
The interviews and literature research also reveal the most important trends and developments for this sector. The following trends and developments are most eligible for analysis:
The pressure on reducing logistic costs. According to the interviewed companies in this sector the most important trend by far is reducing logistic costs. Many reasons were given to support this:
6 o Pressure on prizes, which force companies to sell more products to at least acquire the
same turnover. However more products go through the distribution system, which means that the logistic costs increase.
o The need to decrease inventory, which is mainly due to the recession, making it harder to sell machines and thus causing more obsolete machines in inventory.
Emerging markets in CEE. Most of the interviewed companies do not have a strong presence in CEE. Some however manage to sell quite a few products in this region. The economies in this region are increasing and are thus interesting to look into.
European production. Most companies have sourced their production to the far east. Some companies also have part of their production set up in Europe.
The Green image. Environmental sustainability is a trend that in general seems to become increasingly important. One of the most important trends in this area at this moment is the carbon footprint.
These trends and developments lead to the following scenario’s on which the different distribution structures have been tested and compared to the current situation:
Increase in transport costs Increase in turnover in CEE Increase in production in Europe
The carbon footprint (This is not a scenario, but a calculation in the current situation.) A logistic cost calculation model, partly using the in-house software RESPONSE™, was created to evaluate the different distribution structures. The model consist of 4 cost components, which form the basis of this model: transport, warehousing, inventory holding and handling.
Part of the transport and handling components of the model are calculated using RESPONSE™. The data used as input for the model contains 2 months of information on shipments made to customers all over Europe. The company especially has a strong presence in Germany, France, UK and Italy and a weak presence in Central and Eastern Europe. The total size of these shipments is over 80,000 m3 and has a value of over €300 million. The products can be split up into 3 categories:
Printers and copiers
Peripheral modules, such as feeders and sorters Consumables, such as toners
The analysis shows that the blueprint 2-tier structure performs the best cost-wise in the current situation and thus supports the decision for choosing the 2-tier structure in this sector. It also performs the best cost-wise in the CEE and European production scenario’s.
However the decentralized structure performs better when the transport costs are increased and in the carbon footprint calculation.
With natural resources, including crude oil, eventually going scarce and running out, oil prices will go up and so will the cost of transportation. Together with the growing importance of environmental
7 sustainability, chances are that the decentralized structure will gain favor and will become a good alternative for the 2-tier structure in this sector.
