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Creating Structure in an Ad Hoc Environment - Evaluating a distribution network design within Ericsson BNET

Westergren, Magdalena (2009) MTT820
Engineering Logistics
Abstract
<b>Background/Purpose</b><br>
Global competition, an increased focus on market requirements, advances in information and
communication technology as well as in international freight systems, are some factors that have
caused global companies to review their distribution networks. Upon assessing Ericsson’s distribution
network, a need for transit terminals has been acknowledged by the company. These terminals are
intended to exclusively handle externally sourced products that are characterized by a low and
volatile demand; products that are currently handled in an ad hoc manner within the organization.
The proposed network design is supported by the rationale that it will benefit the company; a
hypothesis that this thesis intends to... (More)
<b>Background/Purpose</b><br>
Global competition, an increased focus on market requirements, advances in information and
communication technology as well as in international freight systems, are some factors that have
caused global companies to review their distribution networks. Upon assessing Ericsson’s distribution
network, a need for transit terminals has been acknowledged by the company. These terminals are
intended to exclusively handle externally sourced products that are characterized by a low and
volatile demand; products that are currently handled in an ad hoc manner within the organization.
The proposed network design is supported by the rationale that it will benefit the company; a
hypothesis that this thesis intends to confirm or falsify. An additional aim with the study is to provide
Ericsson with a location model that can be used in order to identify appropriate locations for the
transit terminals. Upon fulfilling this two‐folded purpose, the thesis reviews previous research on
factors that need to be assessed in order to evaluate a distribution network design, which location
determinants that are of importance in the current business climate, along with theory connecting
different product characteristics with suitable distribution networks.<br>
<br>
<b>Design/Methodology/Approach</b><br>
The study is conducted as a single case study at Ericsson business unit BU Networks. The study is to
its major part explanatory in the sense that it aims to bring to light the factors that will be affected
upon reconfiguration of a network, as well as the factors that are of relevance when locating the
nodes within such a network. These factors were derived from semi‐structured interviews (with
internal personnel as well as distribution service providers) and recent research. The quantitative
data used in the evaluation of the distribution network design was extracted from the ERP system
and a survey distributed to internal personnel. The importance of the location factors were derived
by usage of subjective judgments as expressed by personnel within several internal functions within
Ericsson.<br>
<br>
<b>Findings</b><br>
<i>Contributions to the company</i><br>
According to this study the network design is anticipated to be of an unbeneficial nature for the
company. This conclusion is in line with contemporary distribution theory, according to which
products with low and variable demand should be handled by direct shipping from supplier to
customer. The problems that the suggested distribution network was aimed to solve are suggested
to be addressed by means of improvement of the ERP system to enable visibility in the distribution
system; by a segmentation of the products according to the distribution strategy that their
characteristics imply, and by utilization of cross‐functional teams in order to facilitate global
optimization.<br>
<br>
<i>Industrial contributions</i><br>
This study presents a procedure that organizations can use when they intend to evaluate a specific
distribution network. The procedure allows each company to formulate its own, specific objectives
that the network should aim at, and to evaluate the potential of the network on the basis of those
evaluative criteria. The study also proposes a method for identifying company specific factors that
are of importance when the company locates its distribution facilities. Furthermore it offers a
proposal on how such factors can be used to create a structured manner in which suitable facility
locations can be identified.<br>
<br>
<i>Contributions to the scientific community</i><br>
Our study proposes that the location determinants trade, legal and tax are not assigned sufficient
weight of importance in current location theory. (Less)
Please use this url to cite or link to this publication:
author
Westergren, Magdalena
supervisor
organization
course
MTT820
year
type
M1 - University Diploma
subject
language
English
additional info
ISRN LUTMDN/TMTP--5681--SE
id
1481980
date added to LUP
2009-09-29 15:15:53
date last changed
2010-01-25 09:43:35
@misc{1481980,
  abstract     = {<b>Background/Purpose</b><br>
Global competition, an increased focus on market requirements, advances in information and
communication technology as well as in international freight systems, are some factors that have
caused global companies to review their distribution networks. Upon assessing Ericsson’s distribution
network, a need for transit terminals has been acknowledged by the company. These terminals are
intended to exclusively handle externally sourced products that are characterized by a low and
volatile demand; products that are currently handled in an ad hoc manner within the organization.
The proposed network design is supported by the rationale that it will benefit the company; a
hypothesis that this thesis intends to confirm or falsify. An additional aim with the study is to provide
Ericsson with a location model that can be used in order to identify appropriate locations for the
transit terminals. Upon fulfilling this two‐folded purpose, the thesis reviews previous research on
factors that need to be assessed in order to evaluate a distribution network design, which location
determinants that are of importance in the current business climate, along with theory connecting
different product characteristics with suitable distribution networks.<br>
<br>
<b>Design/Methodology/Approach</b><br>
The study is conducted as a single case study at Ericsson business unit BU Networks. The study is to
its major part explanatory in the sense that it aims to bring to light the factors that will be affected
upon reconfiguration of a network, as well as the factors that are of relevance when locating the
nodes within such a network. These factors were derived from semi‐structured interviews (with
internal personnel as well as distribution service providers) and recent research. The quantitative
data used in the evaluation of the distribution network design was extracted from the ERP system
and a survey distributed to internal personnel. The importance of the location factors were derived
by usage of subjective judgments as expressed by personnel within several internal functions within
Ericsson.<br>
<br>
<b>Findings</b><br>
<i>Contributions to the company</i><br>
According to this study the network design is anticipated to be of an unbeneficial nature for the
company. This conclusion is in line with contemporary distribution theory, according to which
products with low and variable demand should be handled by direct shipping from supplier to
customer. The problems that the suggested distribution network was aimed to solve are suggested
to be addressed by means of improvement of the ERP system to enable visibility in the distribution
system; by a segmentation of the products according to the distribution strategy that their
characteristics imply, and by utilization of cross‐functional teams in order to facilitate global
optimization.<br>
<br>
<i>Industrial contributions</i><br>
This study presents a procedure that organizations can use when they intend to evaluate a specific
distribution network. The procedure allows each company to formulate its own, specific objectives
that the network should aim at, and to evaluate the potential of the network on the basis of those
evaluative criteria. The study also proposes a method for identifying company specific factors that
are of importance when the company locates its distribution facilities. Furthermore it offers a
proposal on how such factors can be used to create a structured manner in which suitable facility
locations can be identified.<br>
<br>
<i>Contributions to the scientific community</i><br>
Our study proposes that the location determinants trade, legal and tax are not assigned sufficient
weight of importance in current location theory.},
  author       = {Westergren, Magdalena},
  language     = {eng},
  note         = {Student Paper},
  title        = {Creating Structure in an Ad Hoc Environment - Evaluating a distribution network design within Ericsson BNET},
  year         = {2009},
}