WAREHOUSING

COSTS AND
DISTRIBUTION
CENTRES AT
HINDUSTAN COCA
COLA BEVERAGES
PVT LTD

1
TABLE OF CONTENTS

EXCECUTIVE SUMMARY 3

CHAPTER-1 4-33
INTRODUCTION

CHAPTER-2 LITERATURE 34-54

REVIEW

CHAPTER-3 RESEARCH 55-60

METHODOLOGY

CHAPTER-4 ANALYSIS & 61-72

FINDINGS

CHAPTER-5 CONCLUSION 73-74

APPENDIX-1 75-76

REFERENCES 77-78

2
EXCECUTIVE SUMMARY

Project report on "the study to evaluate the impact of distribution channel of coca cola co. At
Belgaum city"

Coca-Cola Pvt. Ltd. requested this particular service since Belgaum is a key distribution hub for
the company.

Every business's primary goal is to meet the demands of its target market, and the distribution
channel plays a critical part in this process.

A sample size of 100 will be used for the research. Specifically, "stratified random sampling" is
used to collect the data. The Belgaum municipal distributors' red outlet list was used as the
survey's primary data source.

The following ways in which the company benefits from this research:

To learn the following:

• How effective the current distribution channel is;

• whether or not there are any flows inside the channel; and

• how satisfied are their retailers with the current distribution channel.

3
CHAPTER-1

INTRODUCTION

The project's start date was January 2, 2023, and its end date was January 31, 2023, for a total of
16 themes in Belgaum.

This work was done to fulfill a requirement for the University's Master of Business
Administration program.

The primary goal of this in-house training session was to familiarize trainees with the daily
operations of a business. This gave me a chance to put everything I had learnt to use in the real
world of the company.

The opportunity to learn on the job and exchange ideas with seasoned managers was invaluable.

1.1 COMPANY PROFILE

Pvt. Ltd. COCA-COLA

Coca-Cola first appeared in 1886 as a five-cent-a-glass soda fountain drink. Although the
company expanded rapidly at first, it wasn't until a reliable bottling infrastructure was established
in 1894 that Coca-Cola really took off and became a household name throughout the globe. A
little step toward a big goal (Varila et al., 2007).

Joseph A. Biedenharn, proprietor of a confectionery business in Vicksburg, Mississippi, was

fascinated by the sales of the new fountain beverage named Coca-Cola. He started selling Coca-
Cola in the standard glass Hutchinson bottle.

Biedenharn sent a case to the Company's owner, Asa Griggs Candler. Candler thanked him, but
he didn't do anything else. Although one of his nephews had previously advocated for bottling
Coca-Cola, Candler instead prioritized sales through soda fountains.

The first bottling contract was signed in 1899.

Two Chattanooga, Tennessee lawyers with big dreams thought they might make it big by
bottling Coca-Cola. Benjamin F. Thomas and Joseph B. Whitehead paid Candler one dollar for

4
the exclusive license to bottle Coca-Cola in much of the United States. Soon after, another
Chattanooga attorney named John T. Lupton joined the team.

1900-1909 … Rapid expansion

Three original bottlers divided up the nation into regions and sold bottling rights to enterprising
locals. Major advancements in bottling technology increased their productivity and enhanced the
quality of their goods. Nearly 400 Coca-Cola bottling factories, most of which there run by
families, there in operation by 1909. Some of them only opened during the summer months when
business was particularly good.

In 1916, the contour bottle was born.

Coca-Cola's competitors concerned that the company's signature straight-sided bottle might be
mistaken for the real thing. Glass producers there contacted on behalf of the Company and
bottlers to solicit suggestions for a unique bottle design. Root Glass Company, based in Terre
Haute, Indiana, presented the winning design. The U.S. Patent Office awarded trademark
protection to the Contour Bottle, making it one of the few packages to do so. One of the most
recognizable symbols in the globe today, it is instantly recognizable even in the dark.

1920s … Fountain sales are surpassed by bottling.

At the start of the 1920s, there more than a thousand independent Coca-Cola bottlers in the
United States. Their inspiration and drive led to consistent expansion. Beginning in 1923, six-
bottle cartons had tremendous success. A precursor to modern automated vending machines
there open-top metal refrigerators. By the 1920s' end, Coca-Cola bottle sales had surpassed those
of the fountain variety (Varila et al., 2007).

1920s and '30s … Spreading to other countries

The Company, under the leadership of CEO and Board Chairman Robert W. Woodruff, has
made a concerted effort to expand its bottling operations to countries other than the United
States. French, Guatemalan, Honduran, Mexican, Belgian, Italian, and South African plants then
into operation. When World War II broke out, 44 nations there bottling Coca-Cola.

1940s … Booming after WWII

5
Sixty-four bottling operations there established up all across the globe to ensure the soldiers there
never without supplies. This was in response to an emergency request for bottling tools and
supplies from General Eisenhower’s North African outpost. After the war, several of these
factories there repurposed for civilian usage, permanently expanding the bottling infrastructure
and hastening the Company's global expansion.

Changes in packaging in the 1950s

Now, in addition to the standard 6.5 ounce Contour Bottle, customers could now get 10-, 12-,
and 26-ounce sizes of Coca-Cola. In 1960, cans there also widely distributed for the first time.

1960s … In the 1960s, in addition to Coca-Cola, the market saw the introduction of the Sprite®,
Fanta®, Fresca®, and TAB® brands. In the 1970s, they thylacomyid Mr. Pibb® and Mello
Yellow®. In the 1980s, the world was introduced to diet Coke® and Cherry Coke®. In the
1990s, POTHEYRaDE® and Fruitopia® there introduced. There are already dozens of
alternative brands available in regional markets worldwide (Almeida, 2012).

1970s and '80s … Customer service consolidation

The Coca-Cola Company watched as its retail partners amalgamated and transformed into
multinational mega-chains as a result of the technologically facilitated globalization of the
economy. These types of clients needed fresh methods. As a result, numerous medium- and
large-sized bottlers merged to better meet the needs of their enormous multinational clients. The
Company has actively promoted and funded many bottler consolidations to strengthen the
position of its major bottling partners as the system's primary interface with international
merchants.

1990s … Developing and emerging markets

As a result of political and economic shifts, formerly closed or undeveloped markets have
opened up. The company made significant investments in the construction of factories in Eastern
Europe after the collapse of the Berlin Wall. At the turn of the century, about $1.5 billion was
invested in brand-new African bottling plants (Almeida, 2012).

Modern Age...

6
The Coca-Cola bottling system has strong roots in the neighborhoods where it first sprouted. The
Company's history has served it they’ll as customers look for products that reflect regional
traditions and customs. Strong connections between Coca-Cola bottlers, consumers, and
communities are the basis upon which the whole industry has grown over the last century.

1.2 Vision of the study

● They have set a vision and objectives to ensure long-term development.

● Increasing the company's bottom line while being conscious of our broader

obligations is our primary profit goal.

● Employees: fostering a positive work environment where each individual may reach

their full potential.

● Portfolio: Disseminating a variety of beverage brands that aim to meet consumers'

wants and requirements before they even know they have them.

● Building a strong alliance with other businesses and encouraging loyalty on both

sides.

● Planet: The difference that being a good global citizen can make.

1.3 MISSION
The company's mission statement reads, "Everything they do is inspired by our enduring
mission:

● To Refresh the World... in body, mind, and spirit.

● To Inspire Moments of Optimism... through our brands and the actions.

● To Create Value and Make a Difference... everywhere they engage."

1.4 VALUES
As a group and as individuals, they shall act in accordance with a set of core principles.

● Having "the courage to shape a better future" is a hallmark of leadership.

7
 ● The quality of being "committed in heart and mind"

● "Be real" refers to honesty and integrity.

● A sense of personal responsibility: "If it's going to be, it's up to me."

● "Leverage collective genius" is the motto of collaboration.

● "Seek, imagine, create, delight" is the motto of innovation.

● Superiority in performance; "What they do, they do they’ll"

1.5 BELIEFS

There is a lot to rejoice in, renew, fortify, and safeguard in the globe. The Coca-Cola Company is
a global community of over 200,000 engaged individuals. Every day, they work hard to
revitalize the economy, improve the quality of life at work, safeguard the environment, and
fortify our neighborhoods as responsible members of the community (Muhammad Rizki &
Adnan, 2023).

It is our duty as a local business to provide the resources our employees need to reach their full
creative and professional potential so that they may best reflect the global community in which
they live and work (Varila et al., 2007).

They have a duty to be good stewards of our natural environment and to invest in local
economies by driving market innovation.

"And as a local citizen, they recognize our obligation to help enhance the they’ll-being of our
neighborhoods."

1.6 The Coca-Cola Company's Core Values and Commitments

The Coca-Cola Company has earned its trustworthy and esteemed reputation over many years.
Through upholding these values—quality, integrity, excellence, compliance with the law, and
respect for the distinctive customs and cultures of communities in which they operate—they

8
hope to earn the trust of our employees and the people with whom they do business around the
world.

Our company has always filleted strict ethical standards in all of its dealings with the public.
They uphold the human rights values established on a global scale.

Recognizing these worldwide standards is in keeping with our commitment to fostering a

rewarding work environment, protecting the environment, and bolstering the communities in
which they live and work.

1.7 Principles for Evaluating Suppliers

The Supplier Guiding Principles (SGP) are a cornerstone of the corporate responsibility
initiatives of The Coca-Cola Company. The notion that good corporate citizenship is critical to
our long-term commercial success is the impetus for these initiatives, which aim to instill these
values in our employees and the businesses they work for.

The Coca-Cola Company believes that shared values must serve as the basis for partnerships
with its suppliers, especially given the fact that laws, cultures, and economic situations vary
widely around the globe. To ensure that our suppliers share our values and adhere to our
standards, they have outlined those expectations and requirements in a set of principles called the
Supplier Guiding Principles. They require our direct suppliers to adhere to the standards listed
below, since they mirror the ideals they defend in our own policies (Varila et al., 2007).

1. The right to form unions and engage in collective bargaining

Never violate an employee's right to join, form, or not join a labor union by using threats,
coercion, or other abusive methods. If your workers are represented by a union, it is your
responsibility to communicate openly and negotiate in good faith with the representatives they
have elected.

2. Ban all forms of child labor

Respect the legal age requirements set out by the government.

3. Outlaw all forms of forced labor and worker abuse

9
All types of forced work, including as jail labor, indentured labor, bonded labor, military labor,
and slave labor, are prohibited.

4. Put an end to prejudice

Keep your workplaces free from any kind of harassment, whether it be verbal or physical.
Qualifications, performance, skills, and experience should be the foundation for recruiting,
hiring, placement, training, remuneration, and progression (Almeida, 2012).

5. Working Conditions and Pay

Pay workers a fair wage that reflects their value to the company and the local job market.
Provide workers with training and development opportunities, as they’ll as growth possibilities,
and run your business in accordance with all pay, work hour, overtime, and benefit rules.

6. Maintain a Healthy and Safe Work Environment

Maintain a safe and healthy environment for employees. Keep everyone safe and healthy at work
so that they can continue to do quality work.

7. Take Care of the Earth

Make sure your company practices don't endanger the planet. Follow all relevant environmental
norms and legislation.

8. Observance of All Requirements and Regulations

In general, businesses that provide goods or services to The Coca-Cola Company or are
otherwise approved by the company must adhere to the following requirements.

9. Supplier agrees to abide by all relevant local and national laws, rules, regulations, and
requirements in the development, production, distribution, and performance of its goods
and services.
10. Supplier of Child Labor agrees to follow all federal, state, and local regulations
pertaining to the employment of minors (Almeida, 2012).
11. No forced, bonded, jail, military, or compulsory labor shall be used by Forced Labor
Supplier.

10
 12. Abuse of Workers Vendor agrees to abide by all federal, state, and local laws prohibiting
the physical abuse of workers.
13. Supplier agrees to abide by all federal, state, and local laws pertaining to the right to
organize and bargain collectively.
14. Supplier shall follow all federal, state, and local anti-discrimination laws.

15. When it comes to pay and benefits, the supplier will follow all federal, state, and local
regulations.

16. Supplier shall follow all state, federal, and local regulations regarding labor hours and
overtime.

17. Safety and Security Supplier shall follow all federal, state, and local regulations pertaining to
security and safety.

18. the Environment The Supplier shall follow all national and local environmental regulations.

19. Supplier shall be able to provide evidence of its adherence to the Supplier Guiding Principles
upon request and to the satisfaction of The Coca-Cola Company under Section 19.

All contracts between The Coca-Cola Company and its direct and approved suppliers include
these basic conditions. Our suppliers are responsible for creating and enforcing the necessary
internal business procedures to guarantee adherence to the Supplier Guiding Principles. To
ensure that its suppliers are following the SGP, the Company frequently employs outside
auditors. Confidential interviews with staff and on-site contractors are a common part of these
evaluations. If a provider violates any provision of the SGP, that supplier must take remedial
steps. Any supplier who is unable to provide evidence that they are complying with the SGP
standards will have their contract with the Company terminated (Apostolov, 2022).

1.8 Quality

The Coca-Cola Quality System (TCCQS) is our integrated approach to managing quality,
environment, health, and safety, and it guarantees the quality and safety of our products. They
make sure that TCCQS is up-to-date with the latest worldwide standards for food safety, quality
management practices, industry standards, and market trends by reviewing it often.

11
Fruit juices and other ingredients given to us by our suppliers are analyzed precisely in our
ingredient assessment labs, for example, so that they can guarantee and enhance the quality of
the products they sell. To ensure the safety of the water used in our goods and the packaging
used to transport them to the end user, they are always evaluating and improving our procedures.
To ensure our partners achieve the highest quality standards, they inform and educate them on
our criteria. TCCQS makes quality assurance and continuous improvement our primary focus.

Coke's global quality strategy, the Quality System touches every facet of the company. Everyone
associated with Coca-Cola has the authority and responsibility to uphold the company's
unwavering commitment to quality in all areas, including goods, procedures, and relationships.
TCCQS requires rigorous self-evaluation from every facet of our organization. This allows us to
keep improving upon our already high standards (Abdul Rehman Khan, 2017).

Our most recent system release, Evolution 3, which then live in 2004, has been independently
measured against the requirements of ISO 9001, the worldwide standard for quality management.

1.9 The Value Stream

Our Vendors

Our suppliers are the companies that provide us with raw materials, finished products, and
everything in between. All authorized and direct suppliers must follow all applicable laws and
regulations regarding working conditions, wages, benefits, hours worked, overtime, health and
safety, and environmental practices. This includes laws and regulations regarding the use of child
labor, forced labor, abuse of workers, freedom of association and collective bargaining,
discrimination, and more. Our Supplier Guiding Principles must be filleted by all new vendors
they work with (Abdul Rehman Khan, 2017).

Our Clientele

Our clientele ranges from mom-and-pop shops to multinational retail and dining conglomerates.
Our clientele ranges from nationally recognized brands like Coca-Cola to mom-and-pop shops
and street vendors.

12
They work with all of our clients, no matter how big or little, to ensure that they all win. By
assisting them, they may expand our own company. Through account management teams, they
and our bottling partners assist our clients and meet their unique requirements.

Through our training and development services, they assist our smaller clients in increasing the
productivity and profitability of their enterprises. More than 21,000 small businesses benefited
from these centers' no-cost training in business management, marketing, finance, inventory
management, and customer service in 2022.

They collaborate with our clients to increase their beverage selection, to educate them on the
health benefits of our products, and to promote them in a responsible manner (Apostolov, 2022).

1.9 The Importance of Proper Packaging

Rather than being an unnecessary expense and waste, packing improves the value of items by
keeping them fresher for longer, protecting them from damage during shipping and handling,
keeping the general public healthier, and making them more convenient to use. The crucial
function packaging serves in society stands in stark contrast to the common misconception that it
is only an annoying byproduct (Swarnakar & Shakil, 2023).

There is still a pressing need to reduce the negative effects of packing, even after their
importance has been shown. In fact, in this new era of diminishing natural resources, increasing
energy costs, and widespread environmental consciousness, forward-thinking businesses are
looking beyond merely limiting their impacts to developing competitive packaging solutions that
maximize social and environmental value.

1.10 Concerning Bottling

Our global reach and intimate familiarity with local markets are two of our greatest assets.

The core of this method is the bottling mechanism they've developed. There is a long chain of
production, packaging, and distribution that must occur before any of our 2,400 beverage items
may be enjoyed by anybody, anywhere in the globe. They have to have the greatest bottling

13
system since they serve 6 billion people in over 200 countries. They have access to tremendous
market potential and are deeply devoted to serving our clientele and local neighborhoods.

1.10 WORKING WITH THE BOTTLERS

The Planet: In all they do, they strive to be a good environmental steward and a force for good in
the world.

Human Resources: Our vision is to be a fantastic place to work where everyone is encouraged to
reach their full potential.

Returns to shareholders: they strive for the highest possible rate of return while being conscious
of our wider obligations.

Portfolio: They provide beverage brands to the international market that are designed to both
predict and fulfill consumer preferences (Swarnakar & Shakil, 2023).

Building reciprocal loyalty among our network of beverage and bottling partners is a top priority
for us.

All of the businesses who help us with bottling are based in the areas where they deliver their
products. They help the economy thrive by providing jobs and spending money locally; they're
also excellent neighbors who make some of the world's most beloved drinks.

It's a large task that requires some ingenuity at times. For example, in Indonesia, where there are
thousands of islands, our Coca-Cola® and other brands are transported by boat. Distribution via
boat is widespread in the Amazon, where the river typically serves as the major highway. Coca-

14
Cola is occasionally delivered on four legs at the Andes' highest altitudes. Thousands upon
thousands of family-run kiosks and home-based enterprises are the backbone of local economies
throughout most of Africa, and bottlers distribute to all of them (CAMANKULOVA & AYHAN,
2020).

1.11 Methods Internal to Our Organization

Coca-Cola is so they’ll-known that many people assume it is produced by a single corporation.

The Coca-Cola system, which consists of The Coca-Cola Company and more than 300 Coca-
Cola bottlers, is really a thriving company operating in over 200 countries worldwide. Our
Company does not own or operate most of our bottlers.

They run the world's largest beverage distribution network alongside our bottling partners. Using
what is colloquially called "the Coca-Cola system," they produce and distribute our products to
more than 1.3 billion daily servings of beverage consumption across the globe through a network
of 848 plants, approximately 200,000 vehicles, and more than nine million coolers and vending
machines.

1.12 System by Coca-Cola

The Coca-Cola Company owns or has rights to use more than 400 different brands, including the
ubiquitous Coca-Cola.

● To bottlers, canners, distributors, wholesale fountains, and even certain fountain stores,

they produce and sell beverage concentrate and syrup.

● Some carbonated and noncarbonated finished drinks are produced and sold.

The Bottlers They Work With

● To make a completed beverage, just mix our syrup with carbonated water, or mix our

concentrate with a streetier, some water, and/or carbonated water.

● Pack drinks into containers, and then deliver them to storage facilities or retail outlets.

15
More than 80% of our global volume is produced and distributed by our bottling partners, who
also run the bulk of our bottling and canning facilities. A small number of bottling and canning
plants are also under the control of The Coca-Cola Company (CAMANKULOVA & AYHAN,
2020).

Partners in bottling might be anything from large, publicly listed corporations to little, family-run
companies. They invest in the great majority of bottlers but own a controlling stake in just a few,
so the vast majority are free to establish their own organizational structures, policies, and
procedures within the bounds of the law and local norms. Mutual benefit, similar objectives, and
core beliefs underpin the cooperative and supportive nature of our ties to these organizations.
Company-owned operations and the larger system are both included in our efforts to influence
environmental actions and regulations for the better.

1.13 Community

They have set down permanent roots in over 200 nations and territories as both residents and
employees. The success and happiness of such neighborhoods depends on us. And they care
deeply about the prosperity and development of these areas.

As they go about our daily work, they create employment both inside our own operations and in
the companies they interact with. They call this phenomenon the "multiplier effect," which
occurs when our company's success benefits not just our employees but also the firms that work
with us.

They also put money into local economies via robust, place-based community initiatives. To
better serve the communities in which they work, they collaborate with local authorities,
organizations, and enterprises. The collaborations and initiatives that emerge from these efforts
are crucial to our mission of improving the quality of life in the places where they do business.

Financial Effects

The Coca-Cola market is mostly regional. Together with our bottling partners, they operate more
than 800 manufacturing facilities worldwide. They employ locals at these factories and other
sites, pay taxes to local and national governments, purchase products, services, and capital

16
equipment from local businesses, and contribute to local community investment initiatives
(Swarnakar & Shakil, 2023).

Through the provision of employment and financial resources, the dissemination of technological
know-how, the encouragement of local enterprise, and other forms of foreign investment, they
aim to promote economic growth and social progress in developing and emerging markets.

Community-Based Efforts

The Company and its bottling partners support several international community initiatives.
Community investment priorities are established on a market-by-market basis, in line with the
local aspect of our company and the diversity of the requirements of different communities. We
collaborate with locals, as well as government agencies and non-profits, to develop and fund
initiatives that will have the most impact.

We support a broad variety of projects that aim to meet local need, including those that do the
following.

HIV/AIDS: Awareness campaigns, condom distribution, orphanages for children affected by the
virus, and hospice care for those who have passed away from the disease.

Promoting self-help organizations, setting up funds, and offering training are all examples of
micro-enterprise support; promoting cultural heritage and the arts, including artists, is another.

1.14 COKE PRODUCTS IN INDIA:

1. Coca-Cola

2. Thumps Up

3. Sprite

4. Fanta

5. Limca

6. Maaza

7. Kinley

17
 8. Minute Maid

The Coca-Cola Company purchases beverages from both Parle and Thumps Up. Parle produces
Thumps Up, Limca, and Fanta, while Coca-Cola produces Coca-Cola, Maaza, Kinley, Sprite,
and Minute Maid.

PROFITABLE BRANDS ARE:

● 300ml - Maaza, Coke, Sprite

● 600 ml - all brands

● 2 litre – All brands

1.14 Regions OF COCA-COLA Co. INDIA

India is been divided into three (3) Regions they are

1. North

2. South

3. Central

CEO

NORTH SOUTH CENTRAL

18
Note: Each strata/region has a Regional Vice President

DIVISION OF THE SOUTH INDIA FOR COCA-COLA INDIA

SOUTH

(REGIONAL VICE PRESIDENT)

ANDRAPRADESH CHENNAI KERALA KARNATAKA

Note: Each state has AREA GENERAL MANAGER (A.G.M)

Mr. Krishnan is the Karnataka state A.G.M.

1.15 KARNATAKA UNIT OF THE COCA-COLA COMPANY IN INDIA

The state of Karnataka is broken up into two major regions, each of which has its own general

sales manager.

1. Northern Karnataka

2. Southern Karnataka

Mr. Vilas is the Additional General Manager for North Karnataka.

Mr. Deepak is responsible for South Karnataka as the AGM.

The region of South Karnataka may be broken down even further into Bangalore.

Second, the northern regions, which include Mysore, Mangalore, Tumkur, Kolar, and others.

19
1.16 ORGANIZATION’S SALES CHART FOR KARNATAKA

AREA GENERAL MANAGER

GENERAL SALES MANAGER

SALES MANAGER

ASSOCIATE SALES MANAGER

AREA SALES MANAGER

SENIOR SALES EXECUTIVE

EXECUTIVE

SALES OFFICER

TRAINEE SALES OFFICER

RURAL SALES PROMOTER / MARKET DEVELOPERS

1.17 DISTRIBUTION CHANNEL OF COCA-COLA PRODUCTS FOR

BELGAUM, GADAG, HAVERI, NORH KANARA

BOTTLING PLANT (BANGALORE)

20
DEPOT (DHARWAD)

DISTRIBUTORS

(BELGAUM, GADAG, HAVERI, NORH KANARA)

RETAILERS

CONSUMERS

Please take note that the "DEPOT" in Dharwad is not part of the distribution chain for Bijapur

and other major markets; rather, these locations obtain their merchandise straight from the

Bangalore facility.

1.18 BANGALORE PLANT DETAILS

PLANT

21
ACCOUNTS LOGISTICS SALES H R MARKETING QUALITY CONTROL

The plant is divided into the following FOUR (4) departments,

1. ACCOUNTS

2. LOGISTICS

3. SALES

4. HUMAN RESOURCE

5. MARKETING

6. QUALITY CONTROL

1.19 TRADITIONAL BUSINESS MODELS USED BY THE COMPANY

Coca-Cola India Holding combines both company-owned and franchisee-owned bottling plants

in the country.

"Company Owned Bottling Operations" (COBO) are those that are handled solely by the

business itself. These COBOs are regulated by the policies of the Coca-Cola Company. There are

three (3) COBO units at the following locations in southern India:

Location: Bangalore (Biddi), Andhra Pradesh & Chennai

FRANCHISE OWNED BOTTLING OPERATIONS (FOBO'S): FOBO's are the

FRANCHISER's operations that the FRANCHISEE owns and runs.

22
The Hospet factory was once a FOBO facility, but it has been acquired by the corporation and

will shortly be put into use for corporate purposes (Muhammad Rizki & Adnan, 2023).

1.20 BELGIAN DISTRIBUTOR INFORMATION

Distributor selection criteria:

Before authorizing a distributor, the corporation evaluates the market. Therefore, the following

will serve as the criterion,

⮚ He should have a godown

⮚ Vehicles

⮚ Manpower

⮚ Deposit for cases/crates at the rate of 200 each

⮚ Liquid value

Distributors in Belgaum

1. Trimurthi

2. Desai

3. Tejasvi

23
1.21 Considerations in Allocating Sales Territory to Distributors

The typical number of stores a salesperson can successfully manage. On a daily basis, a

salesperson may efficiently deal with 60 different locations. According to the regularity of a

certain route. There are three distinct frequency patterns followed by distributors (Varila et al.,

2007).

Optional Clue:

a) Every day

b) Every other day

c) Once a week

This is only done weekly in the country's most remote regions.

1.22 Distribution Channel Operations

Before anything else, the distributor must ensure

Coke, Lime, Orange, Juice, and Water should be packed individually after unloading the truck,

and the brands should be ordered as such: Coke, Lime, Orange, Juice, and Water.

The company gives target to the distributors and these distributors with help of sales executives

break the target into

1. Daily

24
2. Weekly

3. Brand wise

4. Regarding Sales

In this example, the distributor is concentrating on the weaker brands and trying to get as many

of those products into the retailers' mixed case orders as possible.

If, for instance, a distributor sees that Fanta is selling poorly, he or she could decide to stock up

on more of the beverage (Varila et al., 2007).

Once the order is placed at the Dharwad depot, the stock comes up the following day, at which

point the distributor must reorder; however, new stock will not reach the distributor until the

empty bottles have been returned to the depot.

1.23 Distributers route planning

The planning process begins when distributors choose between two routes,

• Possible method

• No Hopeful Detour

Potential routes are ones in which the distributor obtains the most business since the number of

outlets will be higher; as a result, the truck drives daily to such routes in order to fulfill the

market demand (Almeida, 2012).

25
For instance, if a distributor has 400 outlets in his territory, he must strategize his routes such

that he visits 60 outlets every trip.

1.24 Annual Operations Strategy

Two annual plans are available to distributors.

Initial Program Effective January 1 through June 15

Second Program, Effective June 15 through December 31

FIRST PLAN: This plan is seen as a high-yielding season in which the most money may be

made. Seventy percent of the goal must be reached before the end of this season.

SECOND PLAN: The second strategy assumes low levels of activity and heavy marketing

efforts during the off-season.

1.25 Distribution in the marketplace: Salespeople for distributors get sufficient training on how

to interact with retailers. The salesperson's first responsibility upon arrival at the store is to

1. greet the store clerk and

2. inspect the refrigerator or cooler, he’s tasked with making inventory recommendations to

stores.

3. Persuade him to make a purchase

4. Store items in the refrigerator or freezer in brand-specific order

26
5. Take a look at those cozy signs

6. Follow up on concerns and resolve them

The company's backing of the distributor: In order to keep the distributors on board during the

off-season, the corporation offers incentives during the second plan (Almeida, 2012).

1.26 ROI (Return on Investment) EXAMPLE FOR DISTRIBUTORS

● The deposit of 1500 cases at the rate of 200 Rs per case = 3,00,000

● Liquid Value on an average including all mini, 300 ml, half litre and 2 litre = 2,00,000

● Godown deposit = 20,000

● Vehicle = 4,80,000

Therefore the total investment is Rs 10, 00,000

Now to calculate the ROI = ({Volume X Case rate} – Expenses) / Investment

If a distributor has 50,000 volume, 11 Rs per case and Other Expenses 35,000 then ,

50,000 X 11 =55,000 – 35,000 =20,000 Rs

Therefore ROI = 20,000 /10,00,000 = 0.20 = 20%

Hence the ROI is favorable.

1.27 Warehousing Costs

27
Fees for running a warehouse are known as "warehousing costs," and can include things like
rent, utilities, labor, insurance, maintenance, and taxes. The price of warehousing encompasses
not only the cost of the warehouse itself, but also the labor involved in managing inventory and
fulfilling customer orders. Costs like this can't be avoided by enterprises that need to stockpile
products for later sale or distribution.
The size and location of the warehouse, the services provided, the number of shipments
processed, the commodities housed, and the length of time the facility is needed all contribute to
the overall cost of warehouse service.
Let's look at an illustration to better understand this. For example, the cost of warehousing in the
Indian state of Karnataka would fluctuate based on factors including the local cost of labor, the
size of the warehouse you need, and the inventory management software you use. In Pune, the
average monthly cost of a warehouse is between Rs. 15 and Rs. 25 per square foot.
Companies with warehouses all have the same basic cost components, but they all calculate them
differently. However, a costing system allows for the comparison of warehouse expenses as well
as corporate costs.
Due to analyst ignorance, some storage expenses are either disregarded or assigned to the wrong
accounts. Overhead cost allocation is a judgment call in every costing system; there is no one-
size-fits-all formula. The presented cost models were developed to prevent any omissions.
Users should make their own decisions on how to allocate administrative expenditures based on
how the models are customized for them.
There are four types of warehouse expenses.
First, "handling," which includes all costs incurred by the warehouse whether transporting
products in or out? The majority of the cost comes from the people who actually transport the
goods throughout the warehouse. It includes picking and loading orders, as well as receiving and
putting away goods. Labor to re-stock inventory, re-pack, or repair defective goods may also be
included.
Equipment depreciation and the cost of gasoline or electricity to run the equipment used to
handle products in the warehouse is also included in the "handling" category.
Storage fees for trucks or trains, office supplies, and garbage collection are some of the other
costs associated with handling. The term "handling" encompasses the whole sum of money spent
on "goods in motion."

Storage costs are those incurred while "goods at rest" are in storage. No product movement is
required for these expenses to be incurred. Storage costs are expressed on a monthly basis since
they are directly tied to the cost of occupancy of a storage facility.
Occupancy costs include storage fees if a whole building is used for a single purpose.

28
Third, distribution center operations necessitate administrative costs to ensure smooth
functioning of the facility. These expenses would be avoided if the plant were closed. Line
management, administrative work, IT, tools, materials, insurance, and taxes are all factored in.
Non-distribution-center related overhead falls under "general administrative expenses," which is
the fourth category. Expenses like these include general management, administrative help, and
other office overhead. It is a matter of discretion to decide how much should be spent on each
storage facility.
1.28 In depth about Warehousing costs
Enhanced Efficiency
Most of the expenses associated with warehousing, including those for storage and handling, are
susceptible to gains in efficiency.
An increase in the number of units handled per hour may be possible if the operator has access to
better procedures and equipment that allow them to move more units with the same amount of
labor. The operator may be able to increase the number of units stored in the same number of
cubic feet of storage space by making adjustments to the inventory, the storage layout, or the
equipment.
Dangerous component
When a distribution facility is not being used to its full potential, the cost per unit rises.
Utilization rate will always have an effect on fixed expenses.
Labor and other variable costs are rarely as malleable as they first appear. It's possible that upper
management will be hesitant to lay off experienced staff if they'll be needed for the upcoming
peak season. The same is also true of other forms of material handling machinery, such as
forklifts. Therefore, utilization rate is the key risk in cost management.
One other unknown threat is human error. Products can be damaged or incorrectly shipped due to
human error.
Both the insurance company and the warehouse owner/operator need to take the possibility of
loss into account. A measure of risk might be the proportion of overall storage expenses at stake.
It needs to be grounded in actual practice. It's important to look into potential safeguards.
The markup is the most direct indicator of the level of risk involved. While the profit percentage
in time and materials contracts is often modest, the unit pricing contract must account for a
greater profit percentage to account for the significant risk of fluctuating volume.

Think about the buyer's predicament as you evaluate the risk level. Under a time and materials
contract, the purchaser is responsible for all costs associated with the work performed, including
those associated with any special facilities required in the process. In contrast, in a unit price

29
agreement, the customer is only obligated to pay for the services they actually employ.
Expansion and building present not just difficulties, but also high costs.
Comparing a hotel to an apartment is an excellent metaphor for this. The cost of renting an
apartment is lower per square foot than the cost of staying in a hotel. The cost is more, but it's
worth it so that you can utilize the office only when you need it. The apartment is less expensive,
but you have to pay for it whether or not you use it.
Setting a charge for handling
An hourly selling price can be calculated by employing a building-block approach based on the
four types of warehousing expenses. All of the costs associated with Handling are added up first.
Next, direct handling expense is loaded by adding a portion of the costs in (Operating
Administrative Expense) and (General Administrative Expense).
A percentage of profit is added to the selling price to account for handling costs. This total is
then divided by the total number of hours billed to arrive at a cost per handled hour. Hourly rates
can be used to verify the accuracy of current pricing even if they aren't included in customer
invoices.
Setting a value for data storage
The same modular approach is employed, but this time the output is in square feet rather than
hours. This monthly rate reflects the fact that storage expenses accrue at a compounding rate.

To begin, add up everything mentioned in Part 2 (Storage Costs). To arrive at a burdened storage
cost, one must follow the example of handling costs used in this article and add some amount for
running and general administrative costs. The rent per square foot is then calculated by adding
the base rent to the desired profit margin percentage. The per-unit cost of storage is based on that
sum.
Turnover rates for inventory are crucial.
The overall cost of warehousing an item is determined by how long it will remain there (storage
fees are often billed monthly).
In the past, monthly storage fees were applied on top of the initial deposit for each unit stored. A
later billing method was created to streamline the administrative process by charging only half a
month for items received after the 15th of the month and a full month for everything still in
storage on the first of the following month.

A 24:1 inventory turnover rate should result in lower storage costs than a 6:1 inventory turnover
rate, regardless of the technology employed. Because of this, storage prices heavily depend on
the inventory turn rate.
"Make or buy" considerations
30
The majority of what an external logistics provider offers may be accomplished with a well-
managed internal project. The "do-it-yourself" cost of providing similar logistics services can be
approximated by the buyer who knows the amount of space needed and has estimated the
number of personnel required to staff the business.
Then, the logistics service provider's charges are compared to this total. The element of danger is
essential here. In contrast to a unit price agreement, which offers maximum flexibility because
the logistics service contractor assumes all risk, the do-it-yourself alternative is fraught with
peril.
Putting ourselves in the shoes of a logistics company
Some owners of private storage facilities manage their facilities as though they were public
storage facilities. The warehouse manager is responsible for ensuring a profitable operation at the
transferred costs for internal storage and handling pricing.
1.29 Save Money in the Warehouse and Make More Money

Increased warehouse productivity and decreased operational expenses are essential to achieving
any meaningful success in today's low-growth, high-competition economy.
The efficiency and effectiveness of your warehouse's operations is directly proportional to the
success of your supply chain as a whole. It's easy to lose sight of the fact that inventory is
equivalent to cash, which is why it's so important to minimize expenses through careful
management and provide everyone involved a complete picture of how the supply chain works at
every stage.

Supply Chain Junction has developed the 8 Essential Exercises to get your warehouse on the
path to reduced costs and increased profits in these exceptional times, when many businesses are
embracing the digital revolution to guarantee their firm thrives (and not simply survives).

1. Seeing What You Have

With the influx of new internet consumers, emerging retail trends, and widespread changes in
consumer buying patterns, the value of having complete inventory visibility throughout your
supply chain is more apparent than ever.

Business owners are so preoccupied with other tasks that they frequently forget about this.
Relying on an employee's memory to locate product can be extremely frustrating, and it becomes
next to impossible when corporations enforce social distancing and employees are absent.

31
Since IoT-enabled gadgets in 2020 promote a seamless and rapid experience, it is clear and
understandable that customers' expectations and feelings are at an all-time high.

Companies who are unable to satisfy these standards will quickly fall behind their competitors. It
is self-evident that having real-time inventory visibility is crucial to satisfying customer needs
and demanding attention.

According to a recent survey, the majority of businesses rate the effectiveness of their fulfillment
processes as below average. If you don't know how much of a certain item you already have on
hand, you run the risk of ordering either too little (leading to shortages of, say, hand sanitizer) or
too much (resulting in unsold inventory and a waste of capital). Not only would these cause
problems with fulfillment, but it also runs the risk of causing losses due to expiration, depending
on the nature of your organization.
Every company is different, so it's important to evaluate potential obstacles, demand cycles, and
distribution methods to maximize the likelihood of having complete inventory visibility at all
times.
This will make it much simpler to choose a product that combines technologies like radio
frequency identification readers (RFID), barcode readers, and other forms of automation to
enhance your company's inventory visibility.
2. Optimization of Storage
While it may seem simple to just make sure your storage capacity is maximized, in practice this
is a lot trickier and often gets ignored. Stockpiling is crucial in light of recent disruptions in
global supply networks; yet, questions of what and where to store supplies raise significant
difficulties in terms of adaptability, cost, and availability.
Successfully optimized warehouses are essential to a nimble supply chain and routinely
outperform competitors on every front, saving time, space, and resources while reducing errors
and enhancing flexibility, communication, and management.
Many factors must be taken into account while attempting to maximize warehouse storage space.
All of the aforementioned factors are crucial for developing an efficient storage optimization
strategy, which will help you save money by improving the effectiveness of your warehouse's
inventory management.
Working with experts that apply best-in-class layout and design ideas is crucial if you want to
maximize the effectiveness of your warehouse storage.
It stands to reason that a warehouse that has been thoroughly optimized will have better traffic
flow, less stock loss, and more production. Good news for any company, as this always leads to
increased revenue.

32
3. Methods for Detecting and Preventing Theft
As the global burden of Covid continues, theft as a cause of inventory shrinkage is only expected
to worsen. It is difficult to identify whether missing stock is due to theft or simply misplaced
inventory, and where it might have occurred, making it difficult to identify perpetrators and stop
it. This is especially true when there is a large volume of goods moving through your system at
any handling point.
Warning signs for theft in a warehouse include:
stock levels that don't square with sales data
Sales declines while certain employees are on duty Sales decreases and rumors of theft among
staff Members Missing or odd invoices
stock being repeatedly located in inappropriate areas (near exits or loading docks, for example).
The motivations for theft range from individuals struggling with their own finances to a sense of
entitlement to workplace discontent to simple opportunity. Even if your staff is well-provided
for, they may still feel the strain of the Coronavirus economy when trying to support their
extended families or cover the expense of basic necessities.

The easiest method to eradicate a theft-culture from the workplace is to be able to deal with
incidents as soon as they occur.
4. Docking Side by Side
In the midst of a pandemic, when supply chains and logistics are already under stress, cross
docking is a brilliant strategy for cutting warehousing expenses. Supply chain management refers
to the process of moving goods straight from the manufacturer to the end user.

Not only does this reduce the cost and effort required for product management and storage, but it
also reduces the cost and effort required for delivery and labor, two of the most volatile and
unreliable resources at the present moment. The on-demand trend and need can be met by
eliminating unnecessary steps in the shipping process in order to get products to clients more
quickly.

Different types of cross docking exist, and they are determined by the goods being shipped.

transportation flow from ship to mark for a clean cross dock merging (which can be combined
with other warehouse operations like put to storage, opportunistic substitution, and allocation).

33
Before incorporating cross-docking solutions into regular operating processes, firms should
weigh the benefits against the hazards. If things aren't stored in the way your firm would like,
you risk having less control over your stock.
Cross docking is a strategy that can help improve and streamline your supply chain operations. It
is important to keep in mind, however, that the primary goal of cross docking is to ship out the
inventory in the same condition in which it was received.

This is a common source of stress in warehouse management since a foolproof method is needed
to reconcile incoming stock with outstanding orders. In this context, having a top-notch
warehouse management system in place is crucial.

5 Appropriate Use of Technology

As a result of COVID-19 and the subsequent rush by many shops to omnichannel and e-
commerce, technology is advancing rapidly. If you want to keep your supply chain running
smoothly, you need a modern, scalable solution. Thanks to advancements in technology,
contemporary methods of distribution are in widespread use on a global scale, and more are on
the horizon.
Whether it's migrating to a cloud-based solution so that employees can enforce social distancing
and work from home, or enhancing inventory management and visibility, all with the end goal of
providing exceptional customer service, warehouse management systems (WMS) help
businesses find unique solutions to the major challenges they face today.

A WMS may help your company in many ways along the supply chain, helping you to achieve
your goals.

CHAPTER-2
LITERATURE REVIEW

2.1 Distribution Method

34
Methods through which goods are moved from their point of production to their final destination.
Channel intermediaries are sometimes referred to as "middlemen." Merchant intermediaries are
the people who buy items from manufacturers and retailers and resell them. Intermediaries who
perform the role of Broker but do not accept title are known as agents. Retailers and wholesalers
are examples of merchant intermediaries. Brokers, sales agents, and Manufacturers'
Representatives are all types of agents.

When it comes to gaining an edge in today's global economy, marketing channels—which

facilitate the flow of goods and services between manufacturers and their suppliers, merchants
and customers, or any other buyer-seller relationship—are crucial. This is the case for two
primary factors:

● The success of any plan to enter or expand a market hinges on how well it handles

distribution. The free flow of products and services is dependent on the establishment of
contractual arrangements between trading partners.

● In order to cut down on cycle times and stockpiles, new technologies are facilitating

parallel information transmission in real time. Consider Dell Computer, which builds
bespoke PCs on demand to suit the needs of specific customers. Dell is also adept at
matching its demand for material inputs (like chips) to supply levels.

Dell employs JIT manufacturing techniques. Traditional suppliers, producers, distributors, and
retailers increasingly face stiff competition from their online counterparts. It is the needs of a
market that give birth to new avenues of promotion. But markets and customer requirements are
dynamic. Thus, it is correct to say that marketing channels are always developing and changing.
Distribution methods should be flexible enough to accommodate changes in the international
market (“Innovating Distribution Channels for Competitive Advantage,” 2013).

This shift in sales strategy resulted from manufacturers looking for methods to reach a more
mobile consumer base, which led to the rise of new middlemen. For the sales strategy to work,
closer ties have to be forged with the increasingly varied consumer base. To meet the needs of

35
customers in remote places, expanding suburbs, and overcrowded cities, the wholesale and retail
sectors developed.

Two guiding ideas that are especially pertinent to the marketing channel strategy that underpin
relationship marketing are:

Effective and economical long-term partnerships amongst channel members. (It costs more than
10 times as much to acquire new consumers as it does to keep current ones.)

There is trust at the heart of the two-way conversation between sellers and buyers.

2.2 Intermediaries' Functions

Many new channel intermediates emerged as a result of the shift from a production to a
relationship orientation, which resulted in the creation of new customer values. Customers
benefit from the numerous services provided by intermediaries. There are two main
responsibilities of the sorting function:

• Categorizing. Every distribution path requires the consolidation of disparate sources of supply
into more manageable buckets at some point.

• Loss of muscle mass. Manufacturers like to crank out goods in large volumes. As a result,
middlemen must divide large batches of identical goods into more manageable chunks.

One of the most underappreciated roles that middlemen perform is in bolstering trust among
consumers. Need uncertainty, market uncertainty, and transaction risk are only some of the
unknowns that might arise from dealings in distribution networks. Value is created by
intermediaries because they mitigate these dangers.

Logistics expenses and customer service standards are strongly influenced by the physical
distribution of items (“Innovating Distribution Channels for Competitive Advantage,” 2013).
Customers want great service levels at cheap prices, making it difficult to organize physical
distribution. Distribution of commodities is made more difficult by globalization and supply
chain fragmentation because of the growing distances involved and the growing number of hands
involved in the process (Rodrigue 2008). Distribution structure design (DSD) refers to the spatial
layout of the distribution channel (the freight transport and storage system between production
and consumption) and the location(s) of logistics facilities (warehouses and DCs), and is one of

36
the strategic decisions that businesses must make to meet these demands. Multiple distribution
network designs are shown in the figure. Which distribution channel structure is ideal is an issue
with no simple solution. Inventory costs may be reduced for high-value goods like consumer
electronics by using centralized layouts. Outbound transit costs are higher, which is a major
downside of a central arrangement. Products in high demand, for which the reduction of
outbound transit costs is crucial, such as groceries and office supplies, will be given preference
in a decentralized structure Shorter delivery times and lower outward transportation costs are
possible with a decentralized arrangement, but this comes at the expense of more inventory,
storage space, and incoming transportation. Hybrid distribution networks, which combine
centralized and decentralized patterns for different product streams, are another option for
businesses looking to maximize efficiency in many areas at once (CAMANKULOVA &
AYHAN, 2020).

The importance of the distribution channel in boosting a company's success has piqued the
attention of many academics. Researchers Leonidou (1989), Moore (1991), Heide (1994), and
Morgan and Hunt (1984) found that productive partnerships between domestic manufacturers
and their international counterparts contributed greatly to the expansion of export-oriented
businesses. Anderson et al., (1997) observed that the performance of manufacturers, agents,
distributors, and retailers was enhanced by their ability to coordinate and communicate
effectively. Rose and Shoham (2004) found that practical dispute amongst channel members did
not improve the affiliation, and had the opposite impact, decreasing the efficacy of the technique
used, which negatively affected the channel's performance. Based on their research with
industrialized manufacturers, Frazier et al. (1989) concluded that manufacturers' contributions to
dealers' bottom lines are a major factor in determining whether or not dealers in a seller's market
need to maintain an effective channel connection.

It is well recognized that the goal of creating an integrated channel is to boost distribution
channel performance, but this is of little comfort to the members of the distribution channel
arrangement. Mc Naughton (2002) analyzed 2,000 Spanish export-oriented enterprises and their
structural channel integration choice. It was discovered that exporters were driven to build up
various distribution channels in order to protect their investments and continue providing high-
quality service to their clientele in marketplaces.

37
Weigand (1991) found that monopolistic channel members' "unfair behavior" and price might be
influenced by the usage of unofficial channels. Kim (2009) discovered similar findings in the
context of Korean companies, demonstrating the importance of effective supply chain integration
to the competitiveness of sustainable supply chain management (SCM).

According to Ely's (2009) research on Thailand's manufacturing sector, globally focused

businesses may acquire the necessary creative capabilities to compete in a variety of settings.
These businesses saw increased expansion as a consequence. It was also shown that exports were
greater for enterprises with more global involvement.

Another trait of distribution channels is their resistance to modification after they have been set
up. The positions of the channel members, according to Ramaseshan and Patton (1994) and
Zdenko (2011). Rialp et al., (2002) investigated the impact of structural channel integration on
exporting enterprises in Spain and posited the obvious conclusion that establishing a connection
with importers would improve the export process. Kumar (2000) discovered, surprisingly, that
non-integrated channels were also suggested. The importance of information sharing across
group members was further verified by Bret (1995). These results corroborated those of John
(2006), who found that maintaining trust in a partnership was crucial. It has been argued by
Jennifer (2008) and Jiuh (2009) that dedication and trust serve as the primary mediators in
establishing performance.

Innovation and its impact on business success has been the subject of research for quite some
time. various studies have shown that there are various potential advantages for businesses who
accept and utilize innovation. Edosomwan (1989) argues that organizations may improve their
performance by increasing productivity via the introduction of novel ideas. Edosomwan (1989)
added that a company may gain a competitive edge via the implementation of novel
organizational concepts, which would allow it to foster an atmosphere conducive to creativity
and, in turn, profit.

However, some studies have shown conflicting results when attempting to pin down exactly how
innovation affects a company's bottom line. Geroski et al. (1993) found that changes in both
products and manufacturing processes had varying impacts on company profits. Hirch and
Bijaoui (1985) in Israel came to a different conclusion, observing that exporting businesses grew
faster and were more inventive than non-exporting businesses. Love (2001) also claimed that this

38
correlation between British and German manufacturing facilities' innovativeness and export
success was quite significant. The results showed that in both nations, the propensity to export
was significantly impacted by the level of innovation. The results also showed that in the United
Kingdom, export propensity was favorably correlated with innovation activities, whereas in
Germany, where innovation intensity was substantially greater, export likelihood also rose
(Love, 2001).

Several authors, including Harris and Li (2006), have emphasized the importance of innovation
in overcoming barriers to globalization. Ozçelik and Taymaz (2004) investigated the relationship
between product and process innovation and export intensity in Turkey. Roper and Love (2001)
came to a similar conclusion, observing that manufacturing companies in the United Kingdom
and Germany that implemented product improvements saw an increase in their level of export
activity. Export behavior was positively affected by product and process changes, as shown by
Basile (2001).

However, additional research on the relationship between product/process innovation and

business success have shown discrepancies with the studies already noted. According to research
by Kongmanila et al., 2009, there is a favorable correlation between product innovation and
profitability, but not between innovations in the production process and export performance. The
research showed that manufacturing process innovation had a negative path coefficient in terms
of process innovation.

This led them to the conclusion that new business models that did not involve changing the
manufacturing process were more successful. This finding also lent credence to the findings of
Geroski and Machin (1993), who found that changes in business processes had varying effects
on bottom-line earnings.

Similar research by Eitan (2006) on the impact of administrative innovations on business success
confirmed the non-linear nature of the relationship between the two variables. That is to say,
both too few and too many implementations hampered efficiency.

Studies on the competitiveness of small and medium-sized enterprises (SMEs) have gained
traction in recent years due to their importance to the economy. Small and medium-sized
enterprises (SMEs) in developing markets face increased pressures to maximize their

39
development potential via effective management of a wide range of resources. Despite
innovation's reputation as the engine that powers productivity gains, other studies have shown
that the impact of innovation on small and medium-sized enterprises (SMEs) is often nuanced
and situation-specific.

DC site selection and distribution channel architecture, or the logistics network connecting
production and consumption, are both aspects of distribution structure design (DSD). Research
on supply chain design issues such as supply chain strategy, manufacturing site selection,
capacity allocation, performance assessment, and outsourcing might provide insights into the
factors that drive DSD (Song and Sun, 2017). Research on DSD might be either quantitative or
qualitative. There is a wealth of quantitative literature available, including studies that employ
multicriteria analysis (Ashayeri and Rongen, 1997; nden, Acar, and Eldemir, 2016), multicriteria
decision-making (Agrebi, Abed, and Omri, 2017; Onstein et al., 2019b), statistical analysis
(McKinnon, 1984; Hilmola, and Lorentz, 2011), factor analysis (Song, and Sun, 2017), discrete
Examples of qualitative studies include literature reviews (Meixell and Gargeya, 2005; Chopra
and Meindl, 2013; Mangiaracina, Song, and Perego, 2015; Olhager, Pashaei, and Sternberg,
2015; Onstein, Tavasszy, and van Damme, 2019a), interviews (Picard, 1982; Klauenberg, Elsner,
and Knischewski, 2016), and case studies (Nozick and Turnquist, 2001; Studies that exclusively
employ characteristics from other sources, such the numerous that are not included in the list
above, do not attempt to find or explain factors related to DSD. After looking through the
available literature, we found that there is no research that presents a framework of industry-level
determinants affecting DSD. The only writers that suggest applicable frameworks are Lovell,
Saw, and Stimson, Song and Sun, and Onstein et al., however their work covers a considerably
broader range of topics. By contrast, Onstein, Tavasszy, and van Damme make no distinction
between industry sectors as they propose a generic literature-based DSD framework, while
Lovell, Saw, and Stimson focus on the broader concept of supply chain fragmentation
(CAMANKULOVA & AYHAN, 2020).

Distribution channel is defined as an alliance of mediators that takes ownership to a product

throughout the process of marketing, from the original owner to the end client. This definition
comes from Bowesox et al. Because of the nature of distribution channels, which is such that
once they are established, it is often difficult to modify them (Ramaseshan, & Paton, 2008), it is

40
essential for businesses to carefully analyze the distribution channel in order to steer clear of
long-lasting unfavorable expenses.

As a result of the physical separation that exists between producers and final consumers, the
primary purpose of distribution channels is to bridge the gap that exists between them. This is
done in order to lower the transaction costs associated with improving competitiveness, which, in
turn, would result in improved firm performance.

The ability to compete in these areas is essential to the process of getting products to customers
at the right time, in the right location, and through the most effective means possible in order to
satisfy the needs of the customers. In addition, mediators will be able to improve place and time
utility in the event that the physical gap is the first gap to be identified in the event that the
distance between the producers and consumers is separated. The more the distances that are
involved between them, the higher the prize will become. As a result, one of the parties involved
should take the initiative to bridge the distance between them, and they should also assume that
the expense of moving the items would be incurred.

Retailers and wholesalers are two examples of functions that fall under the category of
distribution channels. These types of businesses may be able to produce time utility by keeping
stockpiles of items that can be quickly purchased by customers. Because merchants are not
responsible for this step of the process, purchasers are required to make their orders directly with
manufacturers and then wait for the goods to be manufactured and sent to them
(CAMANKULOVA & AYHAN, 2020).

In addition, as the commodities make their way from the manufacturer to the customer, they will
pass through the hands of a number of different distributors. The expenses of transportation and
handling are incurred throughout the handling process, which results in a rise in the price of the
items. Under these circumstances, the job of distributors is to serve a crucial purpose by
providing consumers with an easy entrée to products at prices that are acceptable to the
customer. According to Peter (1980), the outcome of the distribution system is that it makes a
broad range of products and services easily accessible to each and every customer.

In addition, it has been a widely held belief that innovation strongly predicts the success of
companies. As Heide et al.,(1994) confirmed, the success of an exporter (manufacturers) in a

41
developing country was significantly related to how the behavioral of the affiliation with the
overseas clients were managed. In addition, the empirical study of using IT in distribution
channel- internet, also found that it was able to assist the internationalization process, as well as
to enhance the affiliation with other firms within the same value chain of SMEs (Fern'andez,
2006). It has also been shown that the use of information technology among the participants in
the supply chain promoted organizational coordination and had a favorable influence on overall
performance. According to Nada (2008), the use of information technology directly encourages a
certain kind of synchronization activity, which, if carried out correctly, would allow for the
achievement of both tactical and working advantages. Because of this, in order for suppliers to
finally attain an absolute set of advantages, they need eventually employ information technology
(IT) for both inquiry and utilization inside the channel.

However, further evidence suggests that the strategy developed for integrating inventory and
scheduling in distribution channels increases both effectiveness and efficiency performance
(Varimna, 2009). In accordance with the use of an IT framework, tracking of returnable
packaging and transport units can be supported by IT implementation to improve efficiency
(Martinez et al., 2009). On the other hand, increasing sales can be improved by enhancing the
effectiveness and efficiency of assortment by product configuration technology buildings, and
these methods have the capability in customizing, which, in turn, presents the products to be
more competitive to the customer. (Bayraktar et al., 2010) found that a research of small and
medium-sized enterprises (SMEs) in the food goods and drinks industries in Turkey and Bulgaria
revealed that SMEs might enhance competitiveness by using IT practice and supply chain
strategy.

The following conceptual framework, developed from Walters (1977), was constructed to
investigate the role that innovation played in the distribution channel activities of export-oriented
small and medium-sized enterprises (SMEs), which ultimately contributed to the performance of
those firms. As a result of the fact that other researchers discovered evidence of a beneficial
influence of product and/or process innovation on the export behavior of enterprises (Pla-Barber
& Alegre, 2007; Wagner, 2001; Wakelin, 1998), the conceptual framework and hypotheses are
as follows:

42
Improvements in assortment and distribution capabilities resulting from innovative practices

According to Glenn Walters' definition from 1977 (pp.199), an assortment is "a group of two or
more types of goods which either harmonize each other directly or in total acquire some degree
of potency for future contingencies." According to Poynor et al., (2010), buyers may feel more
happy with their purchase when they choose an option of items from a limited selection as
opposed to one that has a vast range. Here, consumers had the convenience of shopping for more
favorable items in bigger assortments rather than in more limited ones. According to Roger
(1990), assortment operations in the retailing business have the potential to provide one-stop
shopping in a manner that is both effective and efficient.In addition, recent research has shown
that the new modification of the assortment is an experimentally determined considerably
effective and efficient technique to increase the level of pleasure experienced by clients.
According to Cadenat (2003), in order to achieve effective selection in the retailing business,
merchants need to first assess the perception of consumers' assortment. This allows for the actual
recommendations made by the shops to be updated to better match the requirements and
expectations of customers. Fabricio (2004) went on to argue that the benefits of assortment
innovation may also be investigated in the process of product configuration technology creation.
In this approach, innovation could be able to supply the capability of personalizing a product into
a number of different assortments so as to fulfill the consumers' first-choice preferences. After
that, the approach results in productivity, which, in turn, leads to an increase in sales as a result
of the more effective and efficient methods that the items are presented to the clients. However,
JuinKuan Chong (2009) said that a forecasting order of new items and a technique of assessment
in replacement patterns in assortment might potentially offer a whole new degree of
effectiveness to the process of decision making. These results are a consequence of the ideal
assortments that have been built up in accordance with the proper demand characteristic for each
product as well as the substitution patterns that exist among the items.

Improvements in order processing, inventory management, and shipping times brought forth by
innovation

43
According to Bowersox et al.'s (1986) findings, order processing is primarily recognized as a
primary activity in the field of logistics. The movement of goods and the provision of services
would get started as a result of the activity. In addition, order processing has the potential to
generate command status, which enables a logical system to become flexible. The flow of
information that assists in predicting and handling is necessary in order to manage departments.

The driving device for the whole of the logistical system is the message that can be found in the
order management system. Because of this, both the quality and the speed of the information
flow in the order management facilitation integration of the fundamental logistical system
component are seen as being crucial. It is possible to infer that a subpar communication network
may be responsible for order bottlenecks or information inaccuracies that cannot be accounted
for, both of which may pose difficulties for the logistical system. According to Bowersox et al.'s
(1986) research, faults of this kind lead to difficulties in inventory, production schedules, and
patterns of inventory buildup.

In addition, according to Kritchanchai et al. (1999), the order fulfilment process (OFP), which
was backed by Bowersox et al., (1986), has been acknowledged as one of the most important
components of business processes in the majority of organizations that are focused on making a
profit. Receiving orders from customers is often where the process begins, and it is typically
concluded with the delivery of completed goods. In order to fulfill two common goals, the
process includes order handling activities such as order processing, stock checking, make or buy
decision making, supplier selection, purchase order (PO) planning, final product assembly, and
delivery. These activities are carried out in order to fulfill the following objectives: a) delivery of
products to satisfy customers' expectations at the right time, right place, right quantity, and right
price; and b) the achievement of agility to handle uncertainties resulting from both the internal
and external environments.

In addition, a number of earlier research in order handling modification indicated that there was a
substantial correlation between the two and an increase in performance. Order handling might
benefit from technological advancements that would make the process of communication go
more smoothly overall. For example, the use of technologies such as radiofrequency
identification and global positioning systems enables greater real-time tracking information to be
provided for items and replacement orders as they move through the chain (Gary, 2008).

44
According to Linda (2009), re-engineering or employing simulation in order processing allows a
company to add more value throughout the chain, which is likely to lead to improved channel
effectiveness and efficiency performance, which in turn leads to improved firm performance.
According to Elliot (2004), using an enterprise resource planning (ERP) solution as a way of
modification in order processing may increase the efficacy and efficiency of operational
performance in terms of delivering orders on time and overall satisfaction in ERP solution.

Improvements in the performance of information exchange and dissemination via innovation

According to the findings of Zou et al. (2007), effective information exchange is an essential
component in attaining distribution channel performance. The key to achieving the essential
flexibility that would allow them to gradually develop logistics procedures in response to
changing market circumstances is proper coordination among independent channel members.
These members include raw-material suppliers, manufacturers, distributors, and agents that offer
logistical services. In this case, dysfunctional operational performance might be the result of
poor synchronization among the channel participants. According to Lee et al. (1997), the
negative effects of inadequate coordination include greater inventory costs, longer delivery
times, higher transportation costs, higher levels of loss and damage, and worse levels of
customer service. All of these factors contribute to a decrease in customer satisfaction.
According to Fernandez (2006), it was discovered that the use of IT, such as the internet, was
also shown to be able to boost effectiveness. This is due to the fact that it helps the company to
grow in both its market knowledge and its interaction with customers and suppliers or other
enterprises operating within the same value chain. This program gives businesses the ability to
expand their relationships with other companies in the same value chain while also easing the
process of internationalization for small and medium-sized enterprises (SMEs).In addition, it has
been shown that the use of information technology inside firms that are part of a value chain may
promote management coordination and have a favorable influence on performance.

Product and distribution scheduling as well as distribution performance innovations

Product and distribution scheduling is either a single choice about when, where, and in what
quantity the manufacturing should take place (Ballaou, 1978). Product and distribution

45
scheduling is a logistic activity that concerns the group amounts of products that cover when and
where to be produced and supplied. The scheduling of production and distribution might improve
revenue and source usage at each step of the product and distribution processes independently. In
most cases, the cost of the delivery consignment is made up of both a fixed cost and a variable
cost that is proportional to the whole distance of the route that is traveled. For instance, the
overall cost of distribution is determined by the number of shipments that are used as well as the
particular routes that are chosen. Therefore, in order to achieve shorter lead times, it is necessary
to use a greater number of delivery shipments, which would result in an increase in the
distribution costs. Therefore, minimizing the trade-off between the cost of distribution and the
degree of customer service has often been a primary priority among those responsible for making
decisions within the trade system (Bowersox et al., 1986).

In addition, research conducted by Wang et al., (2009) discovered that product scheduling is also
concurrently addressed production scheduling, material supply, and delivery, all of which have
been shown to be effective ways to reduce speed problems. Computerized approaches were
shown to be successful and efficient, which might drive overall profit (Chen et al., 2009). These
methods were used to determine the ideal production quantities, the time to start producing, and
the vehicle routes. According to research published in 2009 by Varimna, innovations in
integrated scheduling of inventory and distribution scheduling were proven to be considerably
capable of improving efficiency.

According to Wang et al.'s research from 2009, a newly developed technique that uses
polynomial-time algorithms to solve distribution and product scheduling problems may cut down
on the amount of money spent on process inventory and transportation. Tadeusz (2009) did some
more research relating to the usage of a novel scheduling system in the electronic industry. This
research was published in 2009. According to Tadeusz (2009), using what was called a
monolithic and hierarchical approach for coordination of the supply chain product flow gave
similar results. Both approaches were capable of finding good coordinated supply chain
schedules for large size problems in a logical computation time using commercially available
software to integrate scheduling. This was the case regardless of which approach was used. The
research of employing an integrated scheduling system may also acquire operational

46
performance in terms of how effectively and efficiently a supply chain network operates
(Subramanya, 2009).

Improvements in inventory and distribution capabilities resulting from innovative practices

(Kruger, 2005) argues that inventories are an essential component of any and all commercial
enterprises.

An inaccurate inventory may lead to a cascade of difficulties, including a loss in high efficiency,
an increase in undesirable products, a diminished degree of customer commitment, pricey
material inventories, and dissatisfaction (Meyer, 1991). According to Meyer (1991), improved
techniques in inventory management (IM) may result in large cost reductions. These cost savings
can be compounded over time. According to Sprague and Wacker (1996), preventing the
mishandling of viability inventory risk control is deemed to be of the utmost importance.

It is often not feasible for businesses to be able to make things and then promptly deliver those
products to the consumers who have ordered them. In this instance, having inventory adds time
utility to the process of reaching the desired level of product availability. As a result, maintaining
an inventory is required in order to create a relationship between supply and demand. An
organization would be able to keep their inventory expenditures to a minimum and steer clear of
the immediate repercussions that come with a shortage of material resources if they had an
efficient inventory management approach. The circumstances surrounding small- and medium-
sized businesses and inventory management lend a specific relevance to these procedures.
Chikan (1990) made the observation that a reliable inventory management system is one of the
most important factors in determining the performance of a company.

Natarajan (1991) addressed the links between inventory management (IM) and competitive
advantage. He brought into emphasis the integration of strategic and competitive aspects, such as
cost, delivery, and quality. Natarajan's research was published in the journal Management
Science. According to Natarajan (1991), if a company can shorten the amount of time it takes to
add value to its components, it will have a significant advantage in markets that are highly
competitive. Nevertheless, the expenses of maintaining inventory are not only dependent on the
quantity of inventory but also the amount of time that the commodities were kept in the system.

47
Despite the fact that the significance of inventory to the continued existence of a company is
widely acknowledged in principle, many small and medium-sized enterprises (SMEs) do not
necessarily base their operations on IM. According to Sprague and Wacker (1996), when
company plans are developed, information management (IM) is not often considered a crucial or
strategic activity.

Improvements in transportation/shipping coordination and distribution efficiency using

innovative means.

According to Yung-yu Tseng's research from 2005, it has been discovered that transportation
systems are an essential component in delivering greater logistical efficiency, lowering operating
costs, and boosting service quality in order to enhance the competitiveness of both businesses
and the government.

In addition, according to Chang (1988), the expenses of transportation accounted for anywhere
between one third and two thirds of the total logistics costs. This cost percentage was verified
further by the analysis of the National Council of Physical Distribution Management (NCPDM),
which found that logistics expenses accounted for 44% of total logistics costs and 6.5% of total
market income on average. According to Lee et al. (1997), inadequate coordination in the
transportation industry may lead to increased prices, longer delivery times, greater levels of loss
and damage, and worse levels of service to customers.

In addition, Stefansson (2009) presented an approach that outlined how to make advantage of
transportation coordination. The concept consisted of three key aspects of intelligent
transportation management: intelligent products, intelligent vehicles, and intelligent
infrastructure, each of which had the potential to influence supply chain performance. In
addition, the use of information technology in the coordination of product flow among channel
members has the potential to boost the performance of channel members (Nada, 2008).

Improvements in both the packaging and distribution processes via innovative thinking

48
Product marketing and safety are both served by packaging when used effectively. Aside from
that, packaging is a tool for improving the effectiveness of the distribution process. The package
design process demands careful attention. The current state of packaging in many businesses, as
well as the obligation that is placed on the logistics department about it: "Marketing management
views packaging narrowly from the point of view of sales." According to Walter (1968),
"packaging engineers see packaging only as a protective device, whereas physical distribution
management can look at packaging broadly and conceive of changes in design, size, media of
transportation, etc., which will contribute to the effectiveness of the distribution system" (Walter,
1968, page 38). According to Walter (1963), the purpose of packing as a kind of protection is to
lessen the likelihood that the product would get spoiled, damaged, or lost as a result of theft or
being misplaced in order to avoid having to pay any further costs. When it comes to the vast
majority of the goods that need to be moved around, the logisticians' primary focus is on
preventing damage.

New packaging methods may have a direct impact on the pricing opportunities and product
choices available to customers, according to the findings of a research that was published in 2006
and carried out by Young on 800 people in the United States (“Distribution Channels:
Understanding and Managing Channels to Market,” 2010).

Therefore, it is clear that the research acknowledged the fact that if the modifications to the
packaging were carried out well, it would result in a good return on investment (ROI) during
increased market share. The research did, however, show that there is a possibility that the
number of sales may decline if a new package does not fulfill the expectations of customers as
well as their practical demands. According to Morgado (2008), the use of plastic materials for
the purpose of packaging might result in a number of advantages. In addition to the protective
features, it had benefits from an environmental point of view since it allowed the items to be
packaged using less material and also made recycling possible. These are both positives for the
environment. The use of plastic materials, with their many options for coloring, decorating, and
printing, not only enables the packaging to get all of the vital information that is required for the
customers, but it also enables the packaging to receive all of the necessary information that is
required so that the product or brand can be readily recognized by the customers.

49
Efficiency improvements in storage, finished-goods distribution, and other areas requiring
innovation

The creation of temporal utility in terms of raw material, industrial material, and final goods is
one of the primary functions of warehousing. According to Koyle and Bardi (1976), constructing
market-oriented warehousing may contribute to customers' satisfaction in terms of both physical
supply (raw material) and physical distribution (finished products) from the customers' point of
view. This could be achieved by establishing market-oriented warehouses.

Even though warehouses become a permanent node in the logistics system, which is where raw
materials, semi-finished goods, or finished goods are stored and maintained in the different
periods of time, the halt of goods within over periods give indications of bottlenecks of the
flowing goods, which could add cost to the products (Koyle, & Bardi,1976, Pp.100).

According to Koyle and Bardi (1976), the selection of activities for customers' requests is the
second function of a warehouse. Product lines are constantly produced by businesses, each of
which may be customized in many ways (including color, size, and form, amongst others).
Serving customers is yet another one of our functions. When an order is placed by a client,
having the items ready in terms of both time and quantity may help speed up the process of
fulfilling that order, which in turn can lead to increased future sales.

The warehouses may also serve the purpose of providing protection against unforeseen events
such as delays in shipping, shortages of supplies from vendors, labor disputes, and so on.

On the other hand, one of the most important aspects of the facilities is the material handling that
takes place inside the storage system. Because there were some instances in which goods were
flowed more than once in each of the areas mentioned, in order to increase the efficiency of
working conditions, every material system should be designed to minimize the possibility of
danger to people who are working around the area and improve logistic service. For example, the
support handling system should be designed to respond more quickly to customers' requirements
(Bowersox et al., 1986).

50
It was mentioned before that the most important goals of warehousing and completed product
handling in distribution are effectiveness and efficiency. This was based on the literature that
was discussed earlier. Firms are able to increase their distribution performance by embracing
innovation via the use of technology and conventional methods, which, in turn, leads to
improved company performance. The empirical investigations that are going to follow will focus
on how innovations in distribution channel-warehousing and material handling may bring about
improvements in distribution performance. The use of automated processes and simulation in the
operation of warehousing and material handling, backed by computerized hardware and
software, may be one solution to the problem of inadequate effectiveness and efficiency in the
operation. According to Diaz (1988), an alternate solution for gaining improvement in an already
established system in the warehouse and material handling industry might be a simulation
application known as lotus 1-2-3. On the other hand, Satya (2009) said that the human and
technological implementation variables that were engaged in increasing the performance of the
material handling operation did important for the effectiveness and efficiency of the operation.
Heragu (2009) added further, stating that in line with innovations in technology, the use of
technology application- autonomous vehicle storage and retrieval systems (AVS/RS) and a web-
based design conceptualization tool for AVS/RS enable warehouses be effective and efficient on
the cost of running operations. This strategy also has the potential to reduce expenses, increase
capacity, and provide better service to customers.

Innovation in terms of the performance of acquisition and distribution

According to Bowersox et al. (1986), "Acquisition is the logistic activity that makes the product
available to the logistic system. This includes the selection of supply source locations, quantities
to be acquired, the timing of purchases, and the form in which the product is to be acquired."
Considering that the purchasing strategy has both a geographical and a temporal component,
which both impact the cost of logistics, acquisition is thus regarded to be vital to logistic. The
terms "acquisition" and "purchasing" are used to describe the operations that take place between
an organization and its various sources of supply. (Ballou 1978, page 298) [footnote]-In this
particular department, in addition to the goods and the costs, the exact delivery becomes the most
important component of the flow system.

51
As a general rule, businesses spend between 40 and 60 percent of their sales on the acquisition of
materials; as a result, the effectiveness of this flow stage has to be handled very carefully. When
taking into account the significance of the acquisition choice and its influence on the amount of
money spent on logistics, there are a number of elements that must be carefully evaluated. These
include the quantity and timing of purchases, the origin of the items, and their physical shape.
The efficiency of the acquisition process is something that may be regarded a desired aim in
order to meet the allotted time for the delivery of the materials, which would have an influence
on the flow of products to consumers. As a result, deciding whether to work with a single or
numerous suppliers, hedging price owing to the fluctuating value of a currency, pricing, and so
on would become issues that needed more investigation (Ballou, 1978). According to Graebner
et al. (2010), using technology in the process of acquisition would make it possible for a
company, acting as a buyer, to get strategically important resources, establish market power, or
produce strategic rejuvenation.

Efficiency of distribution and results achieved by the company

According to Morgan et al. (2004), a long term company orientation should be concerned with
effectiveness as a non-economic performance or non-financial indicator. In the meanwhile,
Kaplan and Norton (1992) analyzed non-financial performance based on complementary
financial statements, such as "effective operational measures on customer satisfaction, internal
business processes, and the organization's innovation and improvement activities" (p.71). These
measurements were used to evaluate the success of the organization in areas that were not related
to its finances.

Effectiveness has been recognized as indications for customer satisfaction, which is commonly
thought to be a key determining element for long term consumer behaviors (Oliver, 1980).
Effectiveness is also considered to be a substantial predictor of good performance in inter-
organizational connection (Inkpen, & Curral, 2004). In addition, according to Dossi and Pateli
(2010), non-financial indicators are likely to be used for the purpose of finding the best practices
within cooperative agreements. It has also been made abundantly evident by Johnson and Kaplan
(1987) that a non-economic instrument might be considerably employed as an expansion signal
of a company's long term aims. This was stressed very clearly. Both Kaplan and Norton (1992)

52
and Ferri et al. (2012) state that profitability and other financial measurements are in fact the
result of non-financial activities and achievements.

Distribution effectiveness as well as success of the company

It is possible that the definition of efficiency is very multifaceted, given that there are a number
of different concepts that relate to its description. According to Borgstrom (2005), a dependent
view on efficiency from the standpoint of a resource is appropriate. It is an objective
measurement that may be used to assess the productivity of an organization. In any case, he
defines efficiency in terms of the activities associated with distribution channels as a multi-
faceted assessment of quality, cost, and overall capabilities. This evaluation is not only meant for
and assessed inside the connection, but it also serves as a measurement of the relationship itself.
When speaking in terms of the flow of goods, the notion of efficiency encompasses the manner
in which prices and expenditures are paid at the lower level. In this context, the phrase "internal
organizational oriented on profit" (Borgstrom, 2005) refers to the concept being discussed.
According to Abdulai et al. (1998), the idea of efficiency may be broken down into three
different categories: technical efficiency, pricing efficiency, and locative efficiency. A company
is said to be technically efficient if it is able to create a greater result or output from the same
number of inputs than other companies are able to do; to put it another way, a technically
efficient company is one that is able to utilize the least amount of inputs necessary to achieve the
desired amount of output.

Therefore, the performance of efficiency may be indicated by the ratio of output to the best
percentage of input allocation; therefore, the measurement may also be placed in distribution
efficiency. According to the explanation provided by the theory of transaction cost in distribution
channel, an expense is incurred whenever a financial transaction is carried out. It is possible to
say that the objective of transaction costs is to seek efficiency in distribution channels by
decreasing expenses incurred during the transaction. This is because transaction costs arise every
time a product or service is moved from a producer to a user (Williamson, 1989), which means
that transaction costs are incurred everytime a commodity or service is transferred from a
producer to a user. When seen in this light, competitiveness may be attained, which in turn can
lead to improved economic performance within a company. In addition, a large number of
empirical investigations have demonstrated, supporting the theory, that the efficiency with which

53
a distribution channel is operated has a major influence on the success of the company.
According to Lee and Kim (2010), using efficiency as a criterion may also affect the inventive
output of a company, which in turn can lead to increased competitiveness.

While a research on Hungarian SMEs suggested that the technical efficiency, a locative
efficiency, and profitability of Hungarian SMEs were closely associated, the study also found
that these three factors were interrelated. According to the findings of the research (Major,
2008), maximizing profits was not incompatible with a planned decrease in the level of
technological efficiency possessed by the company. According to another research that was
conducted on apparel companies in China (Mok et al., 2010), businesses that had a high
proportion of their revenues coming from the domestic market or from exports tended to have a
high proportion of their operations being technically efficient. According to Sanchez et al.
(2011), effective management of an organization's human resources also leads to an increase in
the company's profit.

Recent research on distribution efficiency carried out by Ferri et al., (2012) in export-oriented
small and medium-sized enterprises (SMEs) in the agricultural sector in Java, Indonesia, came to
the conclusion that distribution efficiency had a positive significant link with the economic
performance of firms. Numerous empirical research came to the conclusion that efficiency has
substantial influence on the performance of businesses. The evidence for this may be found in
Lee and Kim (2010), Major (2008), Mok et al. (2010), and Ulaga (2003).

Warehouses are considered as a chance to enhance operational optimization and information

flows, decrease stock-in-transit and provide more flexible distribution (Vri-jhoef et Koselka,
2000). Proper strategy, layout, ware-house operations, and material handling systems are
essential to a warehouse's productivity (Lehrer et al., 2010).According to Gu, et al. (2010),
warehouse design issues involve five sets of decisions: determining the warehouse's overall
structure (conceptual design); determining its size; calculating its layout; selecting its
warehousing equipment; and deciding on its operational strategy. Order fulfillment/picking,
stocking, and stock rota-on policy decisions must also be made as part of a warehouse project
(Koster et al., 2007; Chan et Chan, 2011).There are few systematic studies that cover the
warehouse design approaches (Koster et al., 2007; Baker et Canessa, 2009; Gu et al., 2010),
despite the importance of the topic. Despite the abundance of resources dedicated to project

54
details, no comprehensive syntheses of relevant methodologies have been identified as a
foundation upon which to build a generic warehouse idea (Rouwenhorst et al., 2010).There is a
disconnect between theory and practice when it comes to planning and operating warehouses,
say Gu et al. (2010). The authors argue that progress in the state-of-the-art for warehousing
project methodology is necessary to develop this link between academia and practice.

Lambert and Cooper (2000) argue that integrating critical business activities is an essential part
of effective supply-chain management. Warehouses play a crucial role as nodes in this context's
supply chain. The primary aspects that influence the judgments are illustrated graphically, and a
systematic assessment of the literature is conducted according to a framework developed from an
initial bibliographic survey. Inputs, framework design and implementation, and outcomes were
the three main sections of the finalized framework.

Koster et al. (2007) state that the average and variability of delivery time as well as the precision
of choosing and filling make up a service level. Given the vast number of alternative solutions
and combinations of subgroups of options in the design and implementation stages, both Baker et
Canessa (2009) and Pan et al. (2014) stress the impossibility of reaching an optimum
solution/output at the outset. The authors believe that qualitative and quantitative factors should
coexist in the final design. Given that better service levels entail greater logistics costs, it is
important to find a happy medium between the goal service level and the implementation and
operational expenses of the warehouse.

CHAPTER-3

RESEARCH METHODOLOGY

55
3.1 An issue of management:

The shops in Belgaum, India, are suffering from a "shortage of stock."

3.2 Research Question:

"Understand where the bottlenecks are in the distribution system."

3.3 The reason for the study

Determine whether belgaum city's current means of obtaining coca-cola products can handle the
city's growing demand for them.

3.4 Discussion question:

COCA-COLA COMPANY'S Distribution Channel Efficiency Research in Brussels.

3.5 SCOPE OF THE STUDY

Only shops in Belgaum, India, are included in the research.

3.6 The study has certain limitations:

The survey can only include Belgaum City's merchants, and not those from the outlying villages,
because of time constraints.

Since the firm is the only source of information, the research can only go so far in achieving its
stated goal.

Despite the above caveats, I believe that I have done my best in preparing this report.

3.7 Advantages of the research

The research will force me to deal with the following:

56
 ● The company's ethos

● Their Means of Dissemination

● Customers' overall happiness

● Field service complaint management.

3.8 Objectives of the study:

The project's overarching goal is to learn about and analyze the efficacy of the

distribution channel in getting things to the people who need them when they need them.

The following is required in order to investigate the primary objective:

● The efficiency of the current distribution system.

● Coverage Area

● Inadequacies of the already used channel

● Customers' (retailers') degree of contentment with the current distribution method.

3.9 SAMPLING

SELECTION OF SAMPLE:

With sampling, we may focus on a manageable subset of respondents and put in more effort to

guarantee that their responses accurately reflect the population as a whole.

57
POPULATION:

● People from the Belgaum city.

SAMPLE FRAME:

● Retailers at Belgaum city.

SAMPLE UNIT:

● Retailers who sell Cold-drinks

SAMPLING SIZE:

● 100 retailers only.

SAMPLE METHOD:

● Stratified Sampling.

3.10 Research Design

The research was divided into two parts they were ,

58
 1. Survey

2. Implementation

In the month of January survey was conducted and in the remaining period implementation was

carried out.

3.11 Survey

The city of Belgaum was split into three sections for the purposes of the survey:

1. Bus stand area, which included sites like Bus stand, Fort road, Khade Bazaar, Chavat galli,

Shivaji Nagar, etc.

2. The areas of College Road, Tilakwadi, Vadagoan, Shahpur, etc.

3. Club Road, Sadhaahiv Nagar, Azam Nagar, Nehru Nagar, Shiv Basav Nagar, JNMC Road,

etc.

The questionnaire survey followed the company-provided route planner. The map's directions

were marked with a series of RED OUTLETS.

DETAILS OF RED OUTLETS:

The Red outlets are divided as:

1. BRONZE

2. SILVER

3. GOLD

59
 4. DIAMOND

The following are the reasons behind the aforementioned breakdown:

● Retailers that sell between 200 and 299 cases a year fall into the Bronze category.

● Retailers that sell between 300 and 499 cases per year are considered silver-level

retailers.

● Thirdly, "gold outlets" are retailers that sell between 500 and 799 cases annually.

● Diamond retailers are those that consistently sell 800 or more cases each year.

3.12 Implementation

After the survey was completed, the remaining 16 weeks (2 days per week from January 2007 to

April 2007) were used to carry out the Implementation work for the surveyed outlets.

Using this method, the company's vehicle was sent to each location to ensure that the

promotional activities were carried out as planned and that any issues discovered at the outlets

during the survey were resolved.

During the poll, we were aware of issues with display, credit, etc. In other words, these issues

were resolved during the actual implementation.

The company's goods was prominently displayed in all retail locations surveyed.

60
The product distribution system was mastered, to put it briefly.

3.13 DATA COLLECION APPROACH:

The Data was collected through two sources,

● Primary sources:

a) Questionnaire

b) Personal interaction

● Secondary sources:

a) Related information from internet:

b) Organization Report

3.14 DATA COLLECTION METHOD:

● RETAILER SURVEY

● PERSONAL INTREVIEW

3.15 DATA COLLECTION TECHNIQUE:

● QUESTIONAIRE

61
 ● PERSONAL INTERVIEW

3.16 MEASURMENT TECHNIQUES:

This project is analyzed with the help of SPSS software wherein the data is analyzed with the

help of

● Bar Graphs

● Frequency tables

● Percentage tables

CHAPTER-4

RESULTS & FINDINGS

1) What does the outlet look like?

62
Statistics

N Valid 100
Missing 0

Frequen Percen Valid Cumulative

cy t Percen Percent
t
Valid Coke 23 23.0 23.0 23.0
Pepsi 1 1.0 1.0 24.0
Shared 76 76.0 76.0 100.0
Total 100 100.0 100.0

63
 Based on the data shown above, it seems that 76% of the sampled locations are co-

branded, 23% are Coke monopoly, and 1% are Pepsi monopoly.

2) How's communication been going with the wholesaler?

Statistics

N Valid 100
Missing 0

Freque Percent Valid Cumulativ

ncy Percent e Percent
Valid Good 99 99.0 99.0 99.0
Bad 1 1.0 1.0 100.0
Total 100 100.0 100.0

64
Based on the data in the preceding chart, distributors have an obligation to keep the positive

reception they've received from the vast majority of retailers who were polled.

Even though just 1% of merchants surveyed have a negative attitude, distributors still need to

manage this risk since word of mouth is so influential.

Q3) How many times a week does the distributor make deliveries to stores?

Statistics

N Valid 100
Missing 0

65
 Frequency Perce Valid Cumulative
nt Percent Percent
Vali Once 7 7.0 7.0 7.0
d
Alternativ 47 47.0 47.0 54.0
e
Daily 46 46.0 46.0 100.0
Total 100 100.0 100.0

The chart that is shown above gives an account of the number of times that the distributor went

to the market. This graphic demonstrates that for 47% of the retail outlets that were surveyed,

customers visited on alternating days, for 46% of the retail outlets that were surveyed, customers

visited on a daily basis, and for 7% of the retail outlets that were questioned, customers visited

once a week. This demonstrates that the firm is following the Alternative routes and the everyday

routes the majority of the time.

Q4) How many times are we anticipating presence?

66
 Statistics

N Valid 100
Missing 0

Frequenc Percent Valid Cumulative

y Percent Percent
Vali Once 3 3.0 3.0 3.0
d
Alternati 36 36.0 36.0 39.0
ve
Daily 61 61.0 61.0 100.0
Total 100 100.0 100.0

67
According to the chart that was just shown, there is an extremely high demand for Coca-Cola

products in the city of Belgaum. As a result, 61% of the merchants in the city anticipate daily

visits from Coca-Cola distributors in order to satisfy the needs of their customers. As a result, the

corporation has to give careful consideration to this factor.

36% of outlets anticipate visits on alternate days rather than daily, while establishments that are

not viable outlets anticipate a weekly visit from the distributor.

5) Are coke's product delivered on time

Statistics

N Valid 100

68
 Missing 0

Freque Percent Valid Cumulative

ncy Percent Percent
Valid yes 75 75.0 75.0 75.0
No 25 25.0 25.0 100.0
Total 100 100.0 100.0

According to the data shown above, 75% of merchants agree with the statement that items are

delivered on time, while 25% disagree.

The corporation must exert effort to ensure that this 25% of stores always have stock on hand.

6) Can you always count on a sufficient supply?

69
Statistics

N Valid 100
Missing 0

Freque Percent Valid Cumulative

ncy Percent Percent
Valid yes 66 66.0 66.0 66.0
No 34 34.0 34.0 100.0
Total 100 100.0 100.0

The chart demonstrates that the corporation is successful throughout each supply with regard to

the behavior and ideas that it offers to the shops.

70
As a result, the findings of the study indicate that 66% of the merchants are pleased with the

supply during each delivery, while 34% are unhappy with the same.

7) Sales per week

Statistics

N Valid 100
Missing 0

Freque Percent Valid Cumulativ

ncy Percent e Percent

Valid 0-10 50 50.0 50.0 50.0

10-20 45 45.0 45.0 95.0
20 and 5 5.0 5.0 100.0
above
Total 100 100.0 100.0

71
 According to the figure, the weekly sales for 50% of the retailers range from 0-10 cases,

while the weekly sales for 45% of the retailers range from 10-20 cases. As a result, efforts

should be made to enhance sales via adequate supply and other promotional activities.

There is still another technique, which is to provide according to their demands, and there

should not be a lack of merchandise reaching these outlets.

8) Company should focus on controlling warehousing cost?

Statistics

N Valid 100
Missing 0

72
 Freque Percent Valid Cumulative
ncy Percent Percent
Valid yes 75 75.0 75.0 75.0
No 25 25.0 25.0 100.0
Total 100 100.0 100.0

According to the data 75% of respondents satisfied with controlling of warehousing cost but 25%

disagree with the statement.

9) Warehousing cost affects distribution channels Decisions?

73
Statistics

N Valid 100
Missing 0

Freque Percent Valid Cumulative

ncy Percent Percent
Valid yes 66 66.0 66.0 66.0
No 34 34.0 34.0 100.0
Total 100 100.0 100.0

66% of respondents agree with the statement and 34% of respondents disagree with it.

74
FINDINGS:

1. The majority of the outlets are communal.

2. The fundamental issue is that it takes a long time for the supply to go from the plant to the

depot and then to the distributors; as a result, the distributors are unable to offer the needed

amount to the retailers.

3. The sales that the stores make in a week on average fall anywhere between 0 and 20 cases.

4. The sales staff as well as the distributor have managed to maintain a positive connection with

the merchants.

5. It is anticipated that the frequency of visits would be daily, on average.

6. Company should focus on controlling warehousing costs.

7. Warehousing cost affects distribution channel decisions.

75
CHAPTER-5

CONCLUSION & RECOMMENDATIONS

Distribution Channel plays a very important role, particularly with regard to the soft drink
industry because, if the product is not available on time, consumers will switch to other brands,
causing the company to lose its market share. As a result, an efficient distribution channel is
necessary for this industry, which is why an effective distribution channel plays such an
important role (Almeida, 2012).

The Coca-Cola Company has an efficient system for the distribution of its products.

RECOMMENDATIONS

1. The business must establish a mega stockiest in the city of Belgaum so that it can serve not
only the requirements of the Belgaum market but also those of the areas immediately around it.

2. The corporation is obligated to change Pepsi outlets into Coca-Cola outlets by providing the
former owners with incentives like reward programs and sufficient supplies.

3. The firm has to have its facility in Hospet up and running as quickly as possible so that there
won't be any issues with the stock for the distributors or the stores.

4. The corporation has to put up their best efforts in order to transform the 76% of shared outlets
into monopoly outlets for Coca-Cola. This can be accomplished by providing promotional
activities and also by ensuring that inventories are delivered on time, which is a very crucial
factor.

76
5. Thirty-six percent of the merchants anticipate visits on alternating days rather than on a daily
basis; the outlets that are not prospective outlets anticipate visits on a weekly basis from the
distributor; hence, the firm must provide in accordance with this expectation.

5. In order to bring the level of satisfaction of the merchants all the way
up to 100%, the firm has to correctly serve the remaining 34% of
shops that were assessed.
6. The company should focus on controlling warehousing cost ad it
affects distribution channel decisions of the company.

77
APPENDIX-1

QUESTIONAIRE FOR RETAILERS

1. Name and Address

2. What does the outlet look like?

COKE

PEPSI

SHARED

3. How's communication been going with the wholesaler?

GOOD
BAD
4. How many times a week does the distributor make deliveries to stores?
ONCE
ALTERNATIVE
DAILY
5. How many times are we anticipating presence?
ONCE
ALTERNATIVE
DAILY
6. Are coke's product delivered on time
YES
NO
7. Can you always count on a sufficient supply?

78
YES
NO

8. Sales per week

0-10
10-20
20 and above

8) Company should focus on controlling warehousing cost?

YES
NO

9) Warehousing cost affects distribution channels Decisions?

YES

NO

79
REFERENCES
Distribution Channels: Understanding and Managing Channels to Market. (2010, July 20).
Journal of Product & Brand Management, 19(4), 312–313.
https://doi.org/10.1108/10610421011059630
Cabrol, N. A. (1993, April 23). Martian channels : Statistics of spatial distribution, relative
datation, and implications. Zeitschrift Für Geomorphologie, 37(1), 57–75.
https://doi.org/10.1127/zfg/37/1993/57
Griffith, D. A. (1997, December 18). Gray Market Channels of Distribution in a Developing
Country Context. Journal of Marketing Channels, 6(2), 1–15.
https://doi.org/10.1300/j049v06n02_01
Innovating distribution channels for competitive advantage. (2013, October 29). Referred
Electronic Conference Proceeding, 265–273. https://doi.org/10.7433/srecp.2013.17
CAMANKULOVA, R., & AYHAN, N. (2020, October 13). Localigation Strategy of Global
Brand: Case Study of Coca-Cola. MANAS Sosyal Araştırmalar Dergisi, 9(4), 2475–2484.
https://doi.org/10.33206/mjss.685620

80
Swarnakar, E., & Shakil, A. F. (2023, June). Marketing Strategies of Coca Cola. International
Journal of Research Publication and Reviews, 4(6), 177–180.
https://doi.org/10.55248/gengpi.4.623.44706
Eldredge, D. L. (1982, August). A Cost Minimization Model for Warehouse Distribution
Systems. Interfaces, 12(4), 113–119. https://doi.org/10.1287/inte.12.4.113
Pooley, J. M. (1991, September 1). Private Warehouse Cost Dynamics. International Journal of
Physical Distribution & Logistics Management, 21(9), 4–11.
https://doi.org/10.1108/09600039110007635
Abdul Rehman Khan, S. (2017). The Cost Minimization Model in Warehouse Distribution
System. International Journal of Management and Fuzzy Systems, 3(5), 75.
https://doi.org/10.11648/j.ijmfs.20170305.13
Apostolov, I. (2022, September 25). Warehouse in physical distribution system. Warehouse and
its location choosing. International systems of warehouse rating. Current Economic Trends, 2(1),
8–19. https://doi.org/10.55030/2713-0266-2022-2-1-8-19
SASAKI, K. (1998). Distribution Channels, Uncertain Cost and Information. Studies in Regional
Science, 29(1), 87–100. https://doi.org/10.2457/srs.29.87
Muhammad Rizki, & Adnan. (2023, July 14). THE EFFECT OF DISTRIBUTION COST,
DISTRIBUTION CHANNELS AND MARKETING CHANNELS ON THE SALES VOLUME
OF MIE SEDAAP ON PT. ADR WING GROUP LHOKSEUMAWE CITY. International
Journal of Social Science, Educational, Economics, Agriculture Research and Technology
(IJSET), 2(8), 318–326. https://doi.org/10.54443/ijset.v2i8.187
Varila, M., Seppänen, M., & Suomala, P. (2007, April 24). Detailed cost modelling: a case study
in warehouse logistics. International Journal of Physical Distribution & Logistics Management,
37(3), 184–200. https://doi.org/10.1108/09600030710742416
Almeida, R. (2012, October 31). Cost-Effective Data Allocation in Data Warehouse Striping.
International Journal of Database Management Systems, 4(5), 119–135.
https://doi.org/10.5121/ijdms.2012.4509

81
82