Emerging global direct distribution business model: challenges and opportunities

Integrated and coordinated operations are necessary if manufactures are to reduce lead times and respond quickly to customer needs. An important part of such operations are supply chains that give manufactures a competitive advantage in their global operations. In a recent study, global supply chain has found a major supply chain structural change in the past ten years. In the traditional global distribution channel, all members in the supply chain would anticipate future customer needs in the next echelon of Supply Chain and produce or procure the forecasted amount of components stored in their warehousing facilities to be shipped to customers whenever customer orders were received. The shipment arrangements were made mostly by the shippers of each echelon and thus were composed of many freight forwarding companies and international carriers. Many unexpected delivery “surprises” such as late delivery, shortage of shipment, and damage of products were seen as common rather than the exception.

In this paper, the emerging global direct distribution business model is being analyzed. The supply chain in the Note-book Computer Industry is taken as central part of the analysis with special reference to progressive track in supply chain operation models of Taiwan country. Further, due to heat-up of competition among major notebook computer brands in the global market, and to cope with stricter requirements of fulfilling the order in few working days. ODM (Original Design Manufacturer) started to work with their customers on developing a JIT supply chain that would not only meet 100/2 production requirements but also surpass customer expectation. This paper makes an attempt to describe the innovative global supply chain ‘Taiwan Direct Ship’ (TDS) and ‘China Direct Ship’ (CDS) and also the successful distribution models of Acer Computer, Pentex, and Timex through case analysis. Differences in key components of business models between traditional global distribution (TGD) and global direct distribution (GDD), with GDD, opportunities for global markets are discussed.