DISTRIBUTIO

N
SUPPLY CHAINS AND THE VALUE
DELIVERY NETWORK
 Value delivery network:- a network
composed of the company, suppliers,
distributors and ultimately customers who
partner to help the entire system delivery
better customer value.
THE NATURE AND IMPORTANCE OF
MARKETING CHANNELS
 Marketing channels or distribution
channels:- a set of interdependent
organizations that help make a product or
service available for use or consumption
by the consumer or business user.
OBJECTIVES OF DISTRIBUTION
 Movement of products
 Spreading of products

 Protection of products

 Achieve lowest total cost.

IMPORTANCE OF DISTRIBUTION
 Delivery of satisfaction and standard of living
 Value addition to the product

 Means of production

 Channel of communication

 Occupation and employment.

HOW CHANNEL MEMBERS ADD VALUE
Information: gathering and distributing marketing research and
intelligence information about actors & forces in marketing environment
Promotion: developing & spreading persuasive communications

Contact: finding & communicating with prospective buyer

Matching: shaping and fitting the offer to the buyer needs

Negotiation: reaching an agreement on price and other terms of

offers
Physical Distribution: transporting & storing
Financing: acquiring and using funds to cover the cost of channel

Risk taking: assuming the risk of carrying out the channel work
 CHANNEL
CHANNEL LEVELS
LEVELS
A layer of intermediaries that performs some work
in bringing the product and its ownership closer to
the final buyer.
• Direct Marketing channel has no intermediary
level.
• Indirect marketing Channel has one or more
intermediary levels.
•Manufacturer
•Wholesaler
•Retailer
•Consumer
CHANNELS OF DISTRIBUTION
CONT….
 Producer-consumer channel
 Producer-retailer-consumer channel

 Producer-wholesaler-retailer-consumer channel

 Producer-agent-wholesaler-retailer-consumer channel.
CHANNEL BEHAVIOR AND
ORGANIZATION
 Channel conflict:- disagreement among marketing
channel members on goals, roles and rewards – who
should do what and for what rewards.
 Horizontal conflict:- it occurs among firms at the same
level of channels
 Vertical conflicts:- it occurs between different levels of
the same channels.
 Evaluating
Evaluating the
the Major
Major Alternatives
Alternatives
Exclusive
Exclusive Selective
Selective Intensive
Intensive
Distribution
Distribution Distribution
Distribution Distribution
Distribution
Identifying
Identifying Major
Major Alternatives
Alternatives
Setting
Setting Channel
Channel Objectives
Objectives &
& Constraints
Constraints
Analyzing
Analyzing Consumer
Consumer Service
Service Needs
Needs
Channel Design
Channel Decisions
Design Decisions
 CHANNEL MANAGEMENT DECISION

Selecting Channel Members: When selecting channel firm

should determine what characteristics distinguish the better
ones. Evaluate each channel member’s years n business, other
lines carried, growth & profit, cooperativeness and reputation.

Motivating Channel Member: Channel should be motivated

continuously to do their best, by higher margins, premiums,
promotion allowances etc. Try to build long term partnership.

Evaluating Channel Members: Regularly check and evaluate

channel member’s performance against set standard. And
reward them for their performance.
 Evaluating
Evaluating
Motivating
Motivating

FEEDBACK
Selecting
Selecting
CHANNELMANAGEMENT
CHANNEL DECISIONS
MANAGEMENT DECISIONS
 LOGISTICS MANAGEMENT

 Logisticsmanagement is the governance of supply chain

functions. Logistics management activities typically include
inbound and outbound transportation management,
warehousing, materials handling, order fulfillment, logistics
network design, inventory management, supply/demand
planning, and management of third party logistics services
providers.

 Logisticsaddresses both outbound distribution (from

factory to customer) and inbound distribution (from
suppliers to the factory)
 GOAL OF LOGISTICS SYSTEM

 Providing maximum customer service at least price.

 Maximizing customer service includes rapid delivery, large

inventories, flexible assortments and other services.

 Company must weigh the benefits of providing higher level

service against the cost.
MAJOR LOGISTICS FUNCTIONS
 Transportation
The various means of transport differs in :-
 Cost

 Speed

 Consistency

 Safety
CONT…….
 Warehousing
 Private and public warehouses

 Number of warehouses

 Location of the warehouse

 Third party logistics

 Inventory management and control

 The re-order point

 The re-order quantity

 Material handling

 Order processing

 Order entry

 Order handling

 Order delivery.
INTEGRATED LOGISTIC MANAGEMENT

The logistics concept that emphasizes team work, both inside

the company and among the marketing channel organizations,
to maximize the performance of entire distribution system. It
helps in providing better customer service.
Cross functional team work inside company
Marketing, sales, finance, manufacturing, purchasing all
functional units has responsibility to various logistics
activities. Close working relationship among functions can be
achieved in effective logistic management.
INTEGRATED LOGISTIC MANAGEMENT

Building Channel Partnership

As distribution channels are linked closely with customer
satisfaction and value, long term partnership should be
established with the channels. Entire supply chain should
work as team for success of each channel.

Third Party Logistics

An independent logistics provider that performs any or all of
the functions required to get their clients products to market.
They are outsourced or contract logistics. Third party are
more efficient and are cost effective.
INTEGRATED
INTEGRATED LOGISTICS
LOGISTICS MANAGEMENT
MANAGEMENT
Concept Recognizes that Providing Better Customer
Service and Trimming Distribution Costs Requires
Teamwork, Both Inside the Company and Among All
the Marketing Channel Organizations.
Company
the Company
the
Cross-Functional Teamwork
Cross-Functional inside
Teamwork inside

Building Channel
Building Partnerships
Channel Partnerships

Logistics
Third-Party Logistics
Third-Party