Give short answers for the following questions:

i. What is distribution in a supply chain? What are the channels of

distribution? And how do they work?

Distribution in supply chain is referred to as the process of overseeing the

movement of goods from supplier or manufacturer to point of sale. It is an
overarching term that refers to numerous activities and processes such as
packaging, inventory, warehousing, supply chain, and logistics.
Distribution means the process by which we make the goods or the
service available to the end consumer. Generally, the place
of production is not the same as the place of consumption. So the goods
have to be distributed to overcome the barrier of place.
It can also be said to be Distribution is defined as the transportation of the
product from the point of production or transhipment to the point or points
where demand has been recorded, in order to satisfy the expectations of
the production enterprise and the consumer (Binioris, 2008).
Channels of distribution are the path by which all goods and services
must travel to arrive at the intended consumer. Conversely, it
also describes the pathway payments make from the end consumer
to the original vendor. Distribution channels can be short or long, and
depend on the amount of intermediaries required to deliver a product
or service. It is also the path through which goods and services
travel from the vendor to the consumer or payments for those
products travel from the consumer to the vendor. The channel can be
as short as a direct transaction from the vendor to the consumer, or
may include several interconnected intermediaries along the way
such as wholesalers, distributors, agents and retailers.

How the channel of distribution works

The role of the distribution channel involves several functions that

can each be performed by one or multiple intermediaries.
Distribution channels are intended to limit the number of the
transactions goods have to go through on their way towards its final
destination.
Wholesalers and retailers break bulk. Which means they order large
quantities of products from the manufacturer and then sell single
products to the end customers?
Channel intermediaries create assortments, which means that they
will source different products and allow the customer a larger choice.
A main task of distribution channels is to have high efficiency.
Transportation and storage, which is another task of distribution
channels, are to be used at maximum capacity at minimum cost.
Wholesalers and retailers will move the goods from one location to
another to store until there is demand for the product.
Intermediaries will usually offer more added value on the product, for
example facilitate returns, offer customer support, etc.
 A common added value for all distribution channels is they all share the
risk with the manufacturer. That is why manufacturers have vested
interest to sell in bulk, in large quantities, while retailers have a vested
interest to carefully asses if a particular product will be sold.
Distribution channel members handle communication with end customer,
including being partially responsible for advertising.

Distribution channels are responsible to create a two-sided connection from

the manufacturer to the customer. We usually focus on one direction of that
relationship – getting the product from the factory to the customer basket.

However, the distribution channel returns profits, products for repair and
customer feedback back to the manufacturer. The selected distribution
channel member’s policies regarding any of those three functions, should
influence a manufacturers decision whether or not they use them in theirs
channel.

The amount and role of distribution channel members determines the level of
the distribution channel. Philip Kotler came up with the definition of the zero-
level distribution channel where one manufacturer sells directly to the
customers.

If the manufacturer uses a distributer to get the customer, that would be a

one-level channel. And if that distributer sells to a retailer, that would be a two-
level distribution channel.

ii. Who are the channel participants in a distribution process?

iii. What is the importance of market coverage decisions in a distribution
process?
iv. How would you differentiate between conventional channels and single
transaction channels? v. How can logistics operations affect the pricing?
2. Discuss the fundamentals of pricing strategy in supply chain
management.
 3. “Channel mapping and matrix approach are of significant importance for a
channel design process.” Discuss this here.

Channel Mapping is essentially a flow illustration of the channels employed by an

organization; mapping gives an insight into existing processes and set up a
blueprint for change. A complete understanding of mapping process is essential,
even if it is designing a new business or product from scratch, mapping the
business and major competitors is helpful. When developing a channel map it
must begin with clear depiction of the market segments to be served. Channel
mapping does not end with just a diagram, it must also comprise of requirement
of the volume of activity linked to every link in the map.
Matrix Approach: this is the second approach used in channel design. The matrix
approach entails extending the concept of separation discussed earlier in this
chapter and provides insight into the most appropriate participants and structures
to accomplish objectives.

Reference

Binioris, A., 2008. Logistics: Introduction in supply chain management. Iatrikes

Ekdoseis P.X. Passxalidis, Athens. (Gr).
Research Gate: Supply Chain Management: a View of the Distribution Channel
https://www.researchgate.net/publication/280728894