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dc.contributor.advisorJarrod Goentzel.en_US
dc.contributor.authorCreyts, Christopher Alanen_US
dc.contributor.authorWeisskopf, Noraen_US
dc.contributor.otherMassachusetts Institute of Technology. Engineering Systems Division.en_US
dc.date.accessioned2017-03-20T19:38:06Z
dc.date.available2017-03-20T19:38:06Z
dc.date.copyright2016en_US
dc.date.issued2016en_US
dc.identifier.urihttp://hdl.handle.net/1721.1/107519
dc.descriptionThesis: M. Eng. in Logistics, Massachusetts Institute of Technology, Supply Chain Management Program, 2016.en_US
dc.descriptionCataloged from PDF version of thesis.en_US
dc.descriptionIncludes bibliographical references (pages 55-57).en_US
dc.description.abstractManufacturers and retailers are increasingly interested in exploring different ways to optimize their fulfillment of e-Commerce orders. An approach that is often considered is drop-shipping, where the manufacturer takes on the responsibility of shipping directly to the consumer. Retailers are interested in this model as it shifts their inventory responsibility upstream and frees up working capital. Manufacturers are intrigued by drop shipping as a means of capturing lost sales on high-value, seasonal products that retailers might be under-stocking. These manufacturers currently lack the retailer-side inventory availability information to assess the extent of this opportunity. We propose a framework to show manufacturers and retailers how to examine the key issues of drop shipping such as capacity constraints, per unit distribution cost, changes in working capital, cost allocations in the supply chain and delivery time to customers. We also explore how to bridge information gaps to gauge inventory availability and lost sales using Web Extraction System data. We demonstrate our framework by partnering with a CPG manufacturer interested in implementing drop-shipping. Using their data from an existing facility and a selected retailer, we simulate drop shipping orders for a specific set of products during the holiday season that are normally fulfilled by the retailer. Firstly we show that in this scenario, the manufacturer will not exceed their current facility's capacity and will require minimal changes to their existing operations. Using Activity-Based Costing (ABC), we then find that the overall channel costs are only slightly more expensive than those in the traditional model. However, the manufacturer takes on a much larger portion of those costs than they would in the existing model. The transfer of the distribution labor and inventory holding costs from the retailer to the manufacturer drives these cost shifts. As expected, we found significant working capital benefits for the retailer when shifting to drop-shipping. To understand the potential gains that could be achieved from capturing lost sales, we paired data from a Web Extraction System with Point-of-Sale data to obtain previously unavailable retailer inventory information. Contrary to initial expectations for this scenario, the retailer displays very high inventory availability, making lost sales a weak justification for adopting this model. Lastly, using publicly available time-in-transit tables, we model the changes in delivery time that customers experience. The results show that the average delivery time increases by one day for most locations in the US. Our framework and analyses contribute to developing an understanding of the opportunities and implications of drop shipping. In addition, we introduce new techniques manufacturers can use to deal with asymmetric inventory information.en_US
dc.description.statementofresponsibilityby Christopher Alan Creyts and Nora Weisskopf.en_US
dc.format.extent57 pagesen_US
dc.language.isoengen_US
dc.publisherMassachusetts Institute of Technologyen_US
dc.rightsMIT theses may be protected by copyright. Please reuse MIT thesis content according to the MIT Libraries Permissions Policy, which is available through the URL provided.en_US
dc.rights.urihttp://dspace.mit.edu/handle/1721.1/7582en_US
dc.subjectSupply Chain Management Program.en_US
dc.subjectEngineering Systems Division.en_US
dc.titleE-Commerce drop shipping : building a CPG supply chainen_US
dc.title.alternativeBuilding a Consumer packaged goods supply chainen_US
dc.typeThesisen_US
dc.description.degreeM. Eng. in Logisticsen_US
dc.contributor.departmentMassachusetts Institute of Technology. Supply Chain Management Program.en_US
dc.contributor.departmentMassachusetts Institute of Technology. Engineering Systems Division.en_US
dc.identifier.oclc962736504en_US


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