Supply Chain with Channels

Topics: Supply chain, Marketing, Supply chain management Pages: 6 (1153 words) Published: January 2, 2013
Supply ChainReport Outline

Topic: ”Supply Chain Relationship with Distribution Channel and Alliances” I- Objectives:

a. To know the meaning of (i) Distribution Channel and (ii) Alliances; b. To understand the generic Channel distribution structure and Channel alignment of one manufacturer; c. To identify channel distribution functions;

d. To learn about the rationale of a Supply chain relationships with distribution channels and alliances; e. To identify some distribution channel and alliances conflicts; and f. To understand about the Logistical Service Alliances.

II- Introduction

Among the least understood areas of business is the complex grouping of institutions referred to as the distribution or marketing channel. Most companies today outsource the distribution effort as it possible to find competent distribution channels to perform the functions. The channel is the arena within which a free market system performs ownership exchange of products and services. It is the battlefield of business where a firm’s ultimate success or failure is determined. The diversity and complexity of channel arrangements makes it difficult to describe and generalize the challenges managers confront when developing a comprehensive channel strategy.

Frequently there may be a chain of intermediaries, each passing the product down the chain to the next organisation, before it finally reaches the consumer or end-user. There have also been some innovations in the distribution of services. The channel decision is very important. In theory at least, there is a form of trade-off. Most companies today outsource the distribution effort as it is possible to find competent distribution channels to perform the functions.

Business managers need to understand channel economics and relationship management in order to plan and implement satisfactory business arrangements. In actual practice considerable planning and negotiation precede establishments of a channel structure. Once a strategy is implemented, it is common for managers to constantly change or modify one or more facets of their channel arrangement. Thus, channel arrangements are dynamic as firms constantly seek to improve their relative position. A superior channel structure can lead to competitive advantage.

III- Definition of Terms

a. Distribution Channels-
The American Marketing Association (AMA) defines a distribution channel as the structure of intracompany organizational units and extracompany agents and dealers, wholesale and retail, through which a commodity, product, or service is marketed.

According to Sir Brian K. McCarthy, Marketing and Managerial Communications Instructor of Portland State University- Graduate School of Business, “Channel is a pipeline of products and services from producer to consumer”. As illustrated below: Consumer/Customer

Public warehouse storage

b. Alliances-
Webster defines the noun alliance as “being allied; a bond or connection; an association to further the common interests of the members”.

IV- Distribution Channel Structure and Functions

a. Structure- (a.1)
Distribution Channels by Market Segment
(J.R. Simplot Company, Logistics Group)

1. National Restaurant Chains

Plant/ Company warehouse
Public warehouse cross dock

Chain’s distribution center

Chain restaurant

2. Food Service

Plant/ Company warehouse

Sub- distributor
Food service distributor
Public warehouse storage


3. Retail

Grocery Stores
Retail/ Wholesale distributor
Public warehouse consolidation

Plant/ Company warehouse


4. Industrial

Buyer’s distribution channel

Buyer’s distribution channel

Industrial buyers’ plant

Plant/ Company warehouse

(a.2) i.e of Channel distribution and/ or...
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