Within the past decade, computationally-enhanced toys have become a staple of ch
ID: 449835 • Letter: W
Question
Within the past decade, computationally-enhanced toys have become a staple of children environments. In large part, this is due to the small size, robust operation, and low cost of embedded computing that enables electronic devices to be included within toys of all descriptions. Amazon has just created a toy called the Amazon Bear, which can read books, play music, and interact with children. What is a good distribution strategy for amazon? (500-750 words) How does this strategy help reach the target market of younger people/children? (500-750 words)Explanation / Answer
1. Given the problem at hand, Amazon can use a hub and spoke distribution model. The main functions of the distribution channel should be:
a. Order processing
b. Warehousing
c. Inventory Management
d. Transportation
a. Order Processing:
Now, in order to target children and younger people the best final point of distribution can be primary schools and Montessori's. The product that we are sourcing is Amazon bear. It is meant for children to assist them in reading books, playing music and interaction. So, besides individual orders, we can take bulk order from schools and Montessori's. In order for that to be processed, there must be a Amazon kiosk at every school. Students can register and place their orders through these kiosks. The payment can be done from the student fund and there should be option for guardians/students to recharge the fund at kiosk at ease.
b. Warehousing:
Warehousing is a big part of Operations. In hub and spoke model, there should be a central distribution center called fulfillment and redistribution center. The stock can be centrally stored at these stations. As per the requirements, they can be distributed to the spoke centers called delivery/sortation centers. This will be an efficient process for efficient storage and can help in reduction of cost. Based on the area of coverage, the number of fulfillment and redistribution centers and delivery/sortation centers will vary. Typically, in a radius of 500 km, there should be one central distribution center and for every radius of 10 km there should be one develivery center.
c. Inventory Management:
The delivery cycle turnaround time (TAT) should be a maximum of 2 days.
Let's say in a 500km radius, there are "x" number of schools.
On an average, we receive "y" number of orders from each school in 2 days.
Therefore, total number of orders = xy
The min. total stock at central hub at any point of time = xy (safety stock)
Therefore, every time the stock dips to xy, we refill the center with another stock of xy.
Thus the max. stock = xy + xy = 2xy
The inventory cycle = 2 days
Therefore, refilling is done after every 2 days.
The spoke centers are delivered orders based on the order placements. It doesn't have any stock in hand.
d. Transportation:
Once an order is placed, the central hub is notified about the same.
The max time for (Procurement + Packaging + Shipping + Reaching to the delivery centre) = 1 day
The max time for (Collection from the delivery centre + delivery at the school) = 1 day
Thus, total TAT = 2 days
Now, there should be required arrangements with transportation companies to deliver the products from the central distribution centers to the delivery centers following the TAT.
We can groom an in-house associate model, where we can recruit associates to deliver the products from the delivery center to the schools. Based on the no of orders and area (travel coverage time), we need to decide the number of associates to be hired. That will make the system efficient in time as well as cost effective.
Since we are delivering through schools, that makes the model efficient to reach optimum target segment.
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