Distribution Channel

Management
Prof P.P.Sengupta
Distribution Channel Management
• Channel management refers to the process of
strategically planning, organizing, and
controlling the various channels and partners
involved in the movement and distribution of
goods and services.
• Effective logistics channel management can
improve efficiency, reduce costs, and enhance
customer satisfaction.

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 What is a distribution Channel ?
• A set of independent organizations
• Connected together to serve the goal of
satisfying customers
• From manufacturer to the ultimate customer

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 Who are channel members ?
• C& F agents
• Zonal distributors
• Regional Distributors
• Area Distributors
• Wholesalers
• Stockists
• Dealers
• Sub dealers
• Show rooms/ outlets
• Retailers
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Levels of Distribution Channels -1

Manufacturer
/Producer

C&F Agents C&F Agents

Zonal Zonal Zonal

Distributors Distributor Distributor

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Levels of Distribution Channels -2

Zonal
Distributor

Regional Regional
Distributor Distributor

Area Area Area

Distributors Distributor Distributor

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Levels of Distribution Channels -3

Area
Distributor

Wholesalers
Wholesalers

Stockists Stockists Stockists

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Levels of Distribution Channels -4

Stockists

Dealers
Dealers

Sub dealers Sub

Sub dealers
dealers

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Levels of Distribution Channels -5

Sub Dealers

Show room/
Show
Outlets
room/Outlets

Retailers Retailers Retailers

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Types of Products and related Channels
• Consumable products ( Push items)
– Capital Goods ( Cars, Home equipments )
– Consumer Durables ( Refrigerators, TVs, Washing Machines)
– Consumables ( Toiletries , packed foods, Apparels, Personal care)
– Pharmaceuticals
– In all the above cases there will be distributor Channels
• Industrial Products (Pull items)
– Customized Items ( One off,, High Technology content e.g Heavy
electricals, Gear boxes) No channel needed direct to industry
– Standard Items ( Electrical Motors, Pumps , compressors, Tyres and
tubes, Steel rods) Channel needed
– Spare Parts, components – Channel needed

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 How members add value
• Contacts
• Experience
• Specialization
• Scale of operation

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 Functions of Channels
• Promotion
• Matching
• Negotiation
• Physical Distribution
• Financing
• Risk sharing

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 Channel Behavior
• Horizontal conflict
• Vertical conflict

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 Channel Structure
• Length of channel
• Breadth of Channel

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 Decision Criteria
• Capacity
• Nos

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 Factors for channel Design
• Cost
• Location
• Degree of Control

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 Real-Life Examples
• Retail Supply Chain: Retailers often manage complex logistics channels
involving suppliers, manufacturers, distribution centers, and retail stores. For
example, a clothing retailer like Zara manages its supply chain to ensure that
the latest fashion trends are quickly designed, manufactured, and distributed
to stores worldwide.

• Food and Beverage Distribution: Companies in the food and beverage

industry must manage logistics channels to ensure the timely delivery of
perishable goods. A company like Coca-Cola works with a network of bottlers
and distributors to get its products to retail outlets and vending machines.

• E-commerce Fulfillment: E-commerce giants like Amazon and Alibaba rely on

logistics channel management to coordinate suppliers, fulfillment centers,
last-mile delivery partners, and even third-party sellers. Efficient logistics
ensure fast and reliable delivery to customers.
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 Real-Life Examples
• Automotive Manufacturing: Automobile manufacturers like Toyota manage a
complex logistics network to bring together various components and parts from
suppliers worldwide. These components are then assembled into finished
vehicles, which are distributed to dealerships globally.

• Pharmaceutical Distribution: Pharmaceutical companies must ensure that

medications and medical supplies are transported with care and compliance.
They work with logistics partners to maintain strict temperature controls and
regulatory compliance throughout the supply chain.

• Waste Management: Waste management companies like Waste Management

Inc. use logistics channel management to optimize routes and schedules for
garbage collection and recycling. This reduces costs and environmental impact.

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 Real-Life Examples
• Airline Industry: Airlines manage logistics channels to
ensure the efficient movement of passengers and cargo.
This includes coordinating flight schedules, baggage
handling, maintenance, and catering services.

• Construction Projects: In construction projects, various

materials and equipment need to be delivered to the
job site on time. Effective logistics channel management
ensures that the right materials arrive when they are
needed, reducing delays and cost overruns

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 Real-Life Examples
• Global Trade and Import/Export: Companies engaged in
international trade manage logistics channels to navigate
customs, shipping, and transportation. For instance, a
company importing electronics from Asia to North America
must coordinate shipping, customs clearance, and distribution
within its target market.

• Healthcare Supply Chain: Healthcare organizations must

manage logistics channels to ensure the timely delivery of
medical supplies and equipment. This was especially crucial
during the COVID-19 pandemic when personal protective
equipment and vaccines needed to be distributed rapidly.
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 Real-Life Examples
• Agricultural Supply Chain: In the agricultural industry,
farmers, processors, and distributors must work together to
ensure that fresh produce, grains, and other agricultural
products reach consumers efficiently. This involves managing
the logistics of harvesting, transportation, storage, and
distribution.

• Electronics Manufacturing: Electronics companies like Apple

coordinate logistics channels to source components,
assemble devices, and distribute them to global markets. This
involves managing suppliers from various countries and
ensuring timely production and delivery.
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 Real-Life Examples
• Fast Food Chains: Companies like McDonald's or Subway
need to manage their logistics channels for sourcing
ingredients, managing inventory, and distributing products to
their numerous franchise locations. Efficient supply chain
management is essential to maintain consistent product
quality and availability.

• Parcel Delivery Services: Companies like FedEx, UPS, and DHL

specialize in logistics channel management for package
delivery. They coordinate a vast network of sorting facilities,
transportation options, and last-mile delivery services to
ensure packages reach their destinations on time.
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 Real-Life Examples
• Oil and Gas Industry: Oil and gas companies manage complex
logistics channels to transport crude oil and refined products
from extraction sites to refineries, distribution centers, and
ultimately to gas stations or industrial customers. This involves
pipeline transportation, maritime shipping, and road and rail
logistics.

• Fashion Industry: High-end fashion brands like Chanel or Louis

Vuitton manage logistics channels to control the distribution
of their products. They often have exclusive boutiques and
carefully selected retailers to maintain brand exclusivity and
control inventory.
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 Real-Life Examples
• Chemical Manufacturing: Chemical companies must manage
logistics channels to transport hazardous materials safely.
They work with specialized carriers and adhere to strict
regulatory requirements to ensure the safe delivery of
chemicals to customers.

• Military Logistics: The military manages logistics channels to

ensure the timely supply of equipment, ammunition, and
provisions to troops in different locations, both domestically
and internationally. This includes planning for transportation,
storage, and distribution during missions and exercises.

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 Real-Life Examples
• Supply Chain for Renewable Energy: Companies involved in
renewable energy, such as wind and solar power, manage
logistics channels to transport large components like wind
turbine blades or solar panels to project sites. Efficient
logistics are critical to the success of renewable energy
projects.

• Telecommunications Infrastructure: Telecom companies

manage logistics channels for the deployment and
maintenance of infrastructure like cell towers and fiber optic
cables. This involves coordinating with suppliers, construction
teams, and maintenance crews.
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 Real-Life Examples
• Retail Grocery Chains: Supermarkets and grocery store
chains, such as Walmart and Kroger, rely on logistics
channel management to maintain adequate stock levels,
manage perishable goods, and optimize supply chains to
meet customer demand efficiently.

• Medical Equipment Manufacturers: Companies that

produce medical equipment, such as MRI machines or
surgical instruments, manage complex logistics channels to
ensure timely delivery to hospitals, clinics, and healthcare
facilities while adhering to strict regulatory standards.
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 Real-Life Examples
• Eco-Friendly Products: Businesses that specialize in eco-
friendly or sustainable products, like organic foods or
environmentally-friendly cleaning supplies, manage
logistics channels to source raw materials, manufacture
products, and distribute them to retailers and consumers.

• Airlines Catering Services: Companies providing catering

services to airlines must manage logistics channels to
prepare and deliver meals, snacks, and beverages to
aircraft, often with tight schedules and specific dietary
requirements.
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 Real-Life Examples
• Automated Vending Machines: Vending machine
operators need to manage logistics channels for
restocking machines with snacks, beverages, and other
products, optimizing routes, and ensuring machines are
well-maintained.

• E-waste Recycling: Companies involved in electronic

waste recycling manage logistics channels for collecting,
transporting, and processing discarded electronics to
extract valuable materials and dispose of hazardous
components responsibly.
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 Real-Life Examples
• Automotive Aftermarket Parts: Companies that supply
aftermarket automotive parts manage logistics channels
to distribute replacement parts to auto repair shops,
retailers, and consumers, ensuring that customers have
access to necessary components for vehicle maintenance.

• Event Management: Event planners manage logistics

channels for organizing conferences, concerts, trade
shows, and other events, coordinating venues,
transportation, catering, and equipment to ensure a
seamless experience for attendees.
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 Real-Life Examples
• Fashion E-commerce: Online fashion retailers like ASOS
or H&M manage logistics channels to source clothing
from suppliers, store inventory in warehouses, and
deliver products to customers worldwide while dealing
with seasonal trends and rapid inventory turnover.

• Book Publishing: Book publishers need to manage

logistics channels for printing, warehousing, and
distributing books to retailers, wholesalers, and online
marketplaces, ensuring titles are available when and
where readers want them.
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 Examples Specific to India.
• Agricultural Supply Chain in India: India has a vast and diverse
agricultural sector. Logistics channel management plays a
crucial role in transporting agricultural products from rural
areas to urban markets. For example, organizations like the
Food Corporation of India (FCI) manage logistics channels to
procure and distribute food grains across the country.

• Indian Railways: Indian Railways is one of the world's largest

railway networks, and it plays a significant role in logistics
channel management within India. It transports goods ranging
from raw materials to finished products across the country,
facilitating trade and industrial operations.
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 Examples Specific to India
• E-commerce Logistics in India: With the
growth of e-commerce in India, logistics
channel management has become vital.
Companies like Flipkart, Amazon India, and
Snapdeal manage complex logistics networks
to deliver products to customers in remote
and urban areas efficiently.

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 Examples Specific to India
• Cold Chain Logistics for Perishables: India's agriculture also
relies on cold chain logistics to transport perishable goods
such as fruits, vegetables, and dairy products. Companies like
Amul and Mother Dairy use refrigerated logistics to maintain
product quality during transportation.

• Pharmaceutical Distribution: India is a major producer and

exporter of pharmaceuticals. Pharmaceutical companies like
Sun Pharma and Dr. Reddy's Laboratories manage logistics
channels to distribute medicines to both domestic and
international markets, ensuring timely delivery and
compliance with regulatory standards.
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 Examples Specific to India
• Textile and Garment Industry: India's textile and garment
industry is known for its diverse products and export
capabilities. Companies like Arvind Mills and Raymond
manage logistics channels to source raw materials, produce
clothing, and distribute products to domestic and
international markets.

• Automobile Industry: India's automobile sector is growing

rapidly. Companies like Maruti Suzuki and Tata Motors
manage logistics channels to source components, assemble
vehicles, and distribute them to dealerships across the
country.
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 Examples Specific to India
• Fast-Moving Consumer Goods (FMCG) Sector: FMCG companies such
as Hindustan Unilever and ITC manage logistics channels to deliver a
wide range of products, including food, personal care, and household
items, to retailers and consumers across India.

• Indian Postal Service: India Post, the country's postal service,

manages logistics channels for mail and parcel delivery, providing
essential postal services to both urban and rural areas.

• Oil and Gas Distribution: India's oil and gas sector, with companies
like Indian Oil Corporation (IOC) and Bharat Petroleum, manages
logistics channels for the distribution of petroleum products and
cooking gas cylinders to consumers and industries.

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