Home / Summaries / Article 4: Designing the distribution network in a supply chain / storage-customer-network

Design options for a distribution network - Retail storage with customer pickup

4 important questions on Design options for a distribution network - Retail storage with customer pickup

What are the characteristics of Retail storage with customer pickup?

In this option, inventory is stored locally at retail stores. Customers either walk into the retail store or place an order online or on the phone, and pick it up at the retail store.

What are the advantages of network distribution design "Retail storage with customer pickup"?

The main advantage of a network with local storage is that it can lower the delivery cost and provide a faster response than other networks.
Transportation cost is much lower than other solutions because inexpensive modes of transport can be used to replenish product at the retail store.
A minimal information infrastructure is needed if customers walk into the store and place their order.
Very good response times can be achieved in this case because of local storage.
Overall, returnability is fairly good using this option.

What are the disadvantages of network distribution design "Retail storage with customer pickup"?

Local storage increases inventory costs because of lack of aggregation.
Facility costs are high because many local facilities are required.
It is more expensive than all other options to provide a high level of product availability.
The major disadvantage is the increased inventory and facility costs.