Physical Distribution Gaedeke and Tootelian10 define physical distribution as: all activities involved in planning, implementing, and

controlling the physical flow of raw materials, in-process inventory, and finished goods from point-of-origin to point-ofconsumption. The main activities include customer service, inventory control, material handling, transportation, warehousing and storage. Vertical marketing systems: This is a system in which the producer(s), wholesaler(s) and retailer(s) act as a unified system. Usually one channel member owns the others, or has contracts with them, or has franchises with others in the channel. The argument for vertically integrated marketing systems is based upon increased efficiency of the system by the removal of duplicated services. They also achieve economies through size, bargaining power and reductions in potential conflicts of interest. Franchisers operate by vertically linking several levels of the marketing system. Thus Coca Cola wholesales its syrup concentrate (product) to franchisees who carbonate and bottle and distribute the brand (processing, packaging and physical distribution) to consumers who have been targeted by Coca Cola's heavy advertising (promotion). Small scale retailers have responded to the competitive advantage of supermarkets by voluntarily integrating their buying and/or wholesaling and marketing operations. This has enabled them to achieve lower operating costs and to offer consumers lower prices than they otherwise could. Horizontal marketing systems: Channels can also develop into horizontal marketing systems in which two or more companies, at the same channel level, cooperate to pursue marketing opportunities. The basis of the marriage is that in combining resources and expertise the partners can achieve some goal that individually they could not. Thus, for example, a seed company and a grain merchant might set up a joint venture to offer farmers a complete package where he buys certified seed from the new enterprise which guarantees to buy his/her grain crop at prevailing market prices. Strategic alliances of this type are likely to increase in the future. In newly liberalised markets they can be especially useful in protecting local agribusinesses whose low level of capitalisation, outdated technology and inexperience of operating within a competitive marketplace makes them vulnerable when foreign competitors with better resources enter their market.

Power and conflict in distribution channels Within a distribution channel there is usually a balance of power, and the characteristics of the channel are shaped by the manner in which power is exercised. Sometimes the balance of power in a channel lies with the producer/manufacturer and in other it lies with the intermediary. Moreover, there is always the potential for conflict between channel members. Conflict between channel members can arise for one or more of the following reasons: Incompatibility of goals: Organisations can have conflicting goals. A grower may want to grade the produce in order to achieve a price premium for the top quality produce or to develop a brand image, but the wholesaler may only be interested in selling large volumes of undifferentiated produce. Confusion over roles and rights: For example, a grower may sell part of the produce through local agents and part direct to supermarkets. This may cause conflict because the local agent believes that all sales should go through him/her. Differences in perceptions: Among the many potential differences in perceptions, which can result in conflict, are: who the customer is; what the market wants; the objectives of other channel members in participating in the market; and the role which other channel members play in helping the organisation achieve its own objectives. Members of a distribution channel can also differ in how they perceive themselves. There is an argument as to whether the distribution channel is more than an abstract academic concept. Whilst manufacturers and producers may think in terms of a distribution system, intermediaries do not necessarily see themselves as part of some other party's system, but instead consider themselves as independent operators. If intermediaries do lack a systems orientation, then there are additional prospects of conflict since they will be, naturally, reluctant to compromise their own interests in deference to those of the distribution system as a whole. Degree of interdependence: The greater the degree of interdependence between two members of the distribution channel, the greater the potential for conflict. This is because the actions of one directly impinge upon the performance of the other.

Logistics is the process of designing, managing, and improving the movement of products through the supply chain. The supply chain is all the firms that engage in activities necessary to turn raw materials into a product and put it in the hands of the consumer or business customer. The difference between a supply chain and a distribution channel is the number of members and their function. A supply chain consists of those firms that supply the raw materials, component parts, and supplies necessary for a firm to produce a product plus the firms that facilitate the movement of that product from the producer to the ultimate users of the productthe channel members.