Introduction

Distribution plays a key role within the marketing mix, and the key to success is its

successful integration within the mix, ensuring that customers get their products at the right

place and at the right time. If the product cannot reach its chosen destination at the

appropriate time, then it can erode competitive advantage and customer retention.

For any organization to be effective there should be effective distribution management

process to convey finished products from the manufacturer to the final consumers. This is

because without distribution the best product will not be delivered and the marketing mix will

break down and fail (Bonoma, 1984).

Distribution channel consists of a group of individuals or organizations that assist in getting

the product to the right place at the right time. Distribution plays a vital role, primarily

because it ultimately affects the sales turnover and profit margins of the organization. If the

product cannot reach its chosen destination at the appropriate time, then it can erode

competitive advantage and customer retention.

The retail industry is responsible for the distribution of finished products to the consumer as

well as the public. The retail sector comprises of general retailers (managed by

individuals/families), departmental stores, specialty stores and discount stores. In practice,

many organizations use a mix of different channels; in particular, they may complement a

direct sales force, calling on the larger accounts, with agents, covering the smaller customers

and prospects. However, the major challenge now facing the retail industry is the power of

the customers or buyers. This is because the customers are becoming increasingly

knowledgeable, impatient, not wishing to wait for the suppliers’ products for any period of

time. This coupled with the fact that firms are now trying to implement specific distribution

strategy or practices based upon their unique set of competitive priorities and business

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conditions to achieve the desired level of performance, has led to an investigation into the

various distribution strategies and practices available with the view to establish the strategy

or practice which has the most influence on retail performance (Mitchell, 2002).

Concept of Distribution Management

James R.Stock and Douglas M. Lambert(1987) define the Physical distribution is the

movement of materiel from the point of production (manufacturer or vendor) to the point of

consumption (consumer/customer). It is identified as the sub-function of supply which deals

with the handling and processing of materiel from acquisition to delivery to the ultimate

consumer -or elimination from the system. This sub-function includes the capability to

identify, classify, receive, document, store, secure, maintain in storage, care and preserve,

select, pack, package, ship, control in transit, and dispose of material (Jobber, 2001).

Frederick E.Webster,Jr (1992) have defined distribution as it is a combination of channel

management and physical distribution management. Channel management concerns the entire

process of setting up and operating the distribution network. Physical distribution

management focuses more narrowly on providing products when and where they are needed

(Jobber, 2001).

The function of distribution channel management has gained wide-spread attention in both

manufacturing and service organizations over the past twenty years. Faced with falling profit

margins in an increasingly competitive environment, organizations looked to the distribution

channel function as a principal source for reducing costs and raising return on their

investment.

Distribution builds stable competitive advantages, since marketing channels are of long-range

planning and implementation, and to build them needs a consistent structure and due also to

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the fact that they are focused on people and relationship. The most common form of

distribution channel is one in which the manufacturer of a product or service goes to market

via channel members which are independent entities.

Distribution Channel

Most producers use intermediaries to bring their products to market. They use a set of

interdependent organizations in the process of making a product or service available for use

or consumption by the consumer or business user. This process is what has been known as

distribution channel (Kotler, 2010).

Drucker (1993) noted that, distribution describes all the logistics involved in delivering a

company's products or services to the right place, at the right time, for the lowest cost. In the

unending efforts to realize these goals, the channel of distribution selected by a business play

a vital role in this process. Well-chosen channel constitute a significant competitive

advantage, while poorly conceived or chosen channel can doom even a superior product or

service to failure in the market. Effective distribution provides customers with convenience in

the form of availability (what, where, when - the right product, at the right place, at the right

time), access (customers' awareness of the availability and authorization to purchase), and

support (e.g. pre-sales advice, sales promotion and merchandising, post-service repairs).

Marketing function of Distribution Management

There are many variations in respect of the distribution management structure however,

intermediaries be deemed as appropriate in the business environment, the following channel

structures would be available:

1. Passing of goods and services direct from the manufacturer to the consumer

2. Passing of goods and services via a retailer and then on to a consumer

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 3. Passing of goods and services from the manufacturer via a wholesaler and then

directly on to the consumer

4. Passing of goods and services from manufacturer via a wholesaler, then on the retailer

and consequently on to the consumer

5. Additionally, the manufacturer can distribute the products and services via an agent to

a wholesaler and then follow the route shown in points 3 and 4.Quite often the types

of channels of distribution used by organizations will depend upon

6. The structures of the market, the size of the market, the complexity of the market and

the geographical dispersion of the market, among the factors.

Figure 1: A typical range of channels of distribution adapted from Armstrong and Kotler

(2010)

Conclusion

A prerequisite to the effective management of marketing channels is knowledge of the

reasons channels exist. The intermediaries' activities are rapidly search procedures compel

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the existence of a large variety of intermediaries. Based on the service demand by the service

output demanded by consumers. The higher the output demanded, the greater the number of

institutions and agencies that will likely be required to bridge the gap between production and

consumption. Service outputs are generated through the organization of the marketing

functions or flows physical possession, ownership, promotion, negotiation, financing, risking,

ordering, and payment.

The actual levels of performance of these functions depend, in turn, on the economics of

distribution. This requires balancing the needs of channel members to achieve profitability

and manage risk, on the one hand, and the desires of consumers to receive the highest

possible amount of service output at the lowest possible price, on the other hand. Therefore,

there are pressures on channel members to both postpone and to speculate. In addition to

these pressures, there are a host of social, political, and cultural factors impinging on channel

members.

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 SUPPLY CHAIN VISIBILITY

Introduction

Global companies are operating in a continuously faster changing environment. The supply

chains are becoming more global with more actors involved which lead to more activities and

larger flows of information. A challenge for the companies is to sort out relevant information

and to make it available for the actors concerned. Also, if the information is not selected,

managed and interpreted in the right way, variations and uncertainty in the supply chain may

arise. If the companies on the other hand can make relevant information available in an

effective way they will have a more efficient supply chain and lower costs. (Siems, 2005)

To cope with these new challenges, the concept of supply chain visibility has grown and

become popular. According to a study by Mahadevan (2010) supply chain management

professionals rate increasing supply chain visibility as the most important challenge they are

facing today. Mahadevan (2010) states the following about the concept: “Many researchers

who have approached the issue have proved that increased visibility will improve the

performance of the supply chain.” (Mahadevan, 2010)

Supply chain visibility has been viewed as the degree to which supply chain partners have

accesses to information related to supply chain operations and management and considered to

benefit each other (Barratt & Oke, 2007). Real time strategic and tactical information is

important for supply chain members to lower uncertainty, improve coordination, and enhance

customer satisfaction. In particular, the timely sharing of information along the supply chain

can dramatically reduce demand distortion, which is termed the ‘bullwhip effect’.

In fact, visibility can be an important capability that may lead to sustainable competitive

advantage in supply chains. Both technological and non-technological antecedents of supply

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chain visibility have been explored, but the relationship between supply chain visibility and

competitive advantage still requires further investigation (Barratt & Oke, 2007).

Concept of Supply Chain Visibility

There is no generally accepted definition of supply chain visibility. The term though seems to

include accessing and providing relevant information within the supply chain. Barratt & Oke

(2007), simply states that visibility is a complex issue that involves people, processes,

technology and information flows. Thus, there is a strong connection between visibility and

information sharing. Zhang et al. (2008) also mean that the different definitions depend on

what perspective visibility is viewed from. From an IT perspective, Siems (2005), makes the

following definition: “Supply chain visibility is the ability to access or view relevant data or

information as it relates to logistics and the supply chain.” (Siems, 2005)

From a logistics perspective, John Fontanella argues that supply chain visibility is the

transparent view of time, place, status and content. Further, from a knowledge management

perspective, Zhang et al. (2008) defines supply chain visibility as: ”Supply chain visibility is

the ability to provide the latest relevant information/knowledge to all supply chain partners

for collaborative decision making” (Zhang et al., 2008)

But for this study, “Supply chain visibility is the capability of a supply chain player to have

access to or to provide the required timely information/knowledge about the entities involved

in the supply chain from/to relevant supply chain partners for better decision support.” (Goh

et al. 2009)

However, visibility can also be divided into one of two types, as described by Zhang et al.

(2008). Tactical visibility is information about for example material flows, finance flows,

inventory levels, production capacity and resources. This information is mostly quantitative

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knowledge and can be acquired from data extracted from business databases. Quantitative

knowledge helps when trying to understand business processes or contexts. The other type,

strategic visibility, is connected to decisions regarding the entire organisation and focuses on

relationships and collaborative decision making. By performing collaborative decision

making, you gain quantitative knowledge. This knowledge is subjective and consists of

peoples’ experience and judgement which provides insights and opinions for faster and better

decisions. (Zhang et al., 2008) In this thesis focus will be on increasing the tactical visibility.

Hopefully increased strategic visibility will come as a long term effect of this.

Impacts of Visibility

The benefits of information sharing and supply chain visibility have been investigated from

several scientific aspects. It is difficult to find a distinction between what can be obtained

from one or the other (Barratt & Oke, 2007).

One benefit that is often mentioned in the literature is improved responsiveness and

flexibility of the supply chain which increases the external performance. The organisation

through good visibility can adapt to changes in its environment and quickly seize new

business opportunities as they rise. This is seen as a great advantage in the faster moving

environment that companies are operating in today. Another benefit connected to the external

performance is increased delivery performance (Barratt & Oke, 2007)..

Supply chain re-configurability is an important dynamic capability in a supply chain for

generating competitive advantage in changing environments. Re-configurability is the ability

to reconfigure resources with timeliness and efficiency in order to deploy a new configuration

that matches the new environment (Goh et al., 2009). A new configuration of competencies

relates to the innovative redeployment of existing resources and their novel synthesis into

new applications. Therefore, different supply chain configurations may exhibit different

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levels of operational efficiency and market knowledge creation. It is important for a supply

chain to quickly reconfigure resources within the chain into a better combination for

addressing shifted market opportunities. Many firms have adopted new supply chain practices

to deliver better products/services to customers, such as postponement strategies, virtual

integration, just-in-time purchasing, vendor managed inventory, collaborative planning,

forecasting, and replenishment (CPFR) programs. These practices reconfigure supply chain

processes as a whole by integrating physical and information flows of collaborative firms

Supply chain performance has received substantial attention in supply chain management

(SCM). Different aspects of time-based performance, including delivery speed and reliability,

new product development time, manufacturing lead-time, and customer responsiveness, are

proposed as the critical supply chain benefits. More specifically, Beamon (1999) argues that

three types of performance measures must be included in any supply chain performance

measurement system: resource measures (e.g., costs and inventory), output measures (e.g., fill

rate, on-time delivery, and customer response time), and flexibility (e.g., volume flexibility,

mix flexibility, and new product flexibility) measures. Moreover, Goh et al. (2009) classify a

list of key supply chain performance variables into strategic, tactical, and operational levels.

Beamon (1999) also indicate that the benefits of SCM systems can be classified as strategic-

or operational oriented. In this regard, Ho et al. (2002) suggest that supply chain performance

measure must be tied to the strategy reflected by the choice of competitive priorities

including cost, quality, flexibility, and delivery. This priority-based supply chain performance

is pursued by supply chain members collectively.

Conclusion

In a fast-changing competitive environment, managers find ways to reinvent value as the

fundamental logic of value creation is also changing. As such, firms need to collaborate with

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their suppliers and customers to create value together through the reconfiguration of roles and

relationships in the value-creating system. In this paper, we argue that supply chain visibility

can provide firms capabilities to reconfigure their supply chains and create strategic value.

For achieving the strategic value, this study identifies, conceptualizes, and operationalizes the

important concepts of supply chain visibility from the dynamic capabilities view. Overall, the

findings suggest that supply chain visibility is critical for creating supply chain strategic

performance, especially through enhancing supply chain recongfigurability

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