Distributed Network Model Lets You Adapt to Unexpected Supply Chain Interruptions

  • by Biju Thantry Parasuraman, Consultant, Infosys Technologies, Ltd.
  • June 15, 2007
Learn about the distributed network model for warehouse storage and determine the best ways you can apply it to your business.
Key Concept
In a distributed network model you have several warehouses in different areas. It allows you to ship materials to customers more efficiently because you ship from a warehouse near them. The distributed network model also allows you to work around unforeseen warehouse closures, as could happen in bad weather.
The growing trend for high-tech companies is to use multiple warehouses around the globe to meet customer demand for the shortest possible order to delivery time — a distributed network model. The advantages of this setup are shorter lead time to delivery and higher customer satisfaction. This is useful to satisfy demands of a one-time customer. You can use it with R/3 or SAP ERP Central Component (ECC).

For example, using this multi-sourcing strategy, a computer manufacturing company could stock its materials in different warehouses spread across a region and serve a customer from the nearest located warehouse. If an unforeseen weather catastrophe shuts down a warehouse due to floods, for example, the distributed network model ensures that the company meets cus-tomer orders and avoids sales operation shutdowns.

This business model applies to any industry that uses warehouses to fulfill customer orders. I’ll discuss the typical scenarios in which you should consider using the distributed network model. This is not available with your ECC or R/3 system as standard, so I’ll also show you how you can map this model in your ECC or R/3 system using the delivery plant functionality in the material master and the user exit in SAPMV45A (sales order processing program).

Biju Thantry Parasuraman

Biju Thantry Parasuraman is an SAP consultant at Infosys Technologies, Ltd., with more than seven years of domain expertise in the areas of high tech and discrete manufacturing. He has been a Sales and Distribution (SD) and Service Management (SM) consultant for the last three years. Biju holds a bachelor’s degree in engineering from NIT-Durgapur and a master’s degree in technology from IIT-Madras.

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