Chapter 12: Distribution Channels

What is a distribution channel?
The institutions that transfer the ownership of and move goods from the point of production to the point of consumption
What is supply chain management?
Refers to a set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless value chain in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time
What is wholesalers?
Those firms engaged in buying, taking title to, often storing, and physically handling goods in large quantities, and then reselling the goods(usually in smaller quantities) to retailers or industrial or business users
What is Logistics Management?
The integration of two or more activities for the purpose of planning, implementing, and controlling the efficient flow of raw material, in-process inventory, and finished goods from the point of origin to the point of consumption
What is direct distribution?
Direct distribution channels allow manufacturers to deal directly with consumers
What is indirect distribution?
With indirect distribution channels, one or more intermediaries work with manufacturers to provide goods and services to consumers
What is multichannel distribution?
Many companies are embracing a multi channel, or hybrid, approach to distribution
What is push marketing strategy?
Designed to increase demand by focusing on wholesalers, distributors, or salespeople, who push the product to consumers via distribution channels
What is pull marketing strategy?
Designed to get consumers to pull the product into the supply chain by demanding retailers carry it
What is distribution intensity?
The number of channel members to use at each level of the supply chain
What are the types of distribution intensities?
Intensive, selective and exclusive
What is intensive distribution?
A strategy designed to get products into as many outlets as possible(Walmart, Loblaws, Target)
What is exclusive distribution?
Strategy of granting exclusive rights to sell to one or very few retail customers so no other customers can sell a particular brand (e.g. Tiffany & Co. , Cartier)
What is selective distribution?
Lies between the intensive and exclusive distribution strategies; uses a few selected customers in a territory(e.g. Hudson Bay, Sears)
What is a distribution centre?
A facility for the receipt, storage, and redistribution of goods to company stores or customers; may be operated by retailers, manufacturers, or distribution specialists
What is channel conflicts?
Results when supply chain members are not in agreement about their goals, roles or awards
What is the first phase of the vertical marketing system?
Members act as a unified system because they realize that each party can maximize its individual benefits by working together to make the distribution system more efficient rather than individually or at cross-purposes
What is the vertical marketing system?
A supply chain in which the members act as a unified system; there are 3 types: administrated, contractual, and corporate
What is an administered vertical marketing system?
A supply chain system in which there is no common ownership and no contractual relationships, but the dominant channel member controls the channel relationship
What is contractual vertical marketing system?
A system in which independent firms at different levels of the supply chain join together through contracts to obtain economies of scale and co-ordination and to reduce conflict
What is franchising?
A contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a retail outlet, using a name and format developed and supported by the franchisor
What is corporate vertical marketing system?
A system in which the parent company has complete control and can dictate the priorities and objectives of the supply chain; it may own facilities such as manufacturing plants, warehouse facilities, retail outlets, and design studios
what are the 5 interrelated activities that emerge in supply chain management?
Designing distribution channels, making information flow, managing the relationships among supply chain partners, making merchandise flow, and managing inventory
Information flow follows what steps?
Flow 1(Customer to store)
Flow 2(Store to buyer)
Flow 3(buyer to manufacturer)
Flow 4(Store to manufacturer)
Flow 5(Store to distribution centre)
What is EDI?
Electronic data interchange is the computer to computer exchange of business documents from a retailer to a vendor and back
What is advanced shipping notice?
An electronic document that the supplier send the retailer in advance of a shipment to tell the retailer exactly what to expect in the shipment
What benefits does the use of EDI provide?
EDI reduces the cycle time(time between the decision to place an order and the receipt of merchandise). EDI improves the overall quality of communications through better record keeping(fewer errors). Data transmitted by EDI are in a computer-readable format that can be easily analyzed and used for a variety of tasks
What is strategic relationship(partnering relationship)?
A supply chain relationship that the members are committed to maintaining long term, investing in opportunities that are mutually beneficial; requires mutual trust, open communication, common goals, and credible commitments
What is mutual trust?
Mutual trust holds a strategic relationship together. When vendors and buyers trust each other, they are more willing to share relevant ideas, clarify goals and problems, and communicate efficiently
What is open communication?
To share information, develop sales forecasts together, and coordinate deliveries
What is common goals?
Supply chain members must have common goals for a successful relationship to develop. Shared goals give both members of the relationship an incentive to pool their strengths and abilities and exploit potential opportunities together
What are credible commitments?
Successful relationships develop because both parties make credible commitments to, or tangible investments in, the relationship. Commitments involve spending money to improve the products or services provided to the customer
What occurs in merchandise flows?
Inbound transportation, receiving and checking, storing and cross-docking, getting merchandise floor ready, shipping merchandise to stores, and inventory management using just in time systems
What is a dispatcher?
The person who coordinates deliveries to distribution centres
What is RFID?
Radio frequency identification tags are tiny computer chips that automatically transmit to a special scanner all the information about a container’s contents or individual products
What are the 3 types of distribution centres?
Traditional, cross docking and combinations
What is a traditional distribution centre?
Is a warehouse in which merchandise is unloaded from trucks and placed on racks or shelves for storage
What is a cross docking distribution centre?
Is one to which vendors ship merchandise prepackaged in the quantity required for each store
What is JIT?
Just in time inventory systems are inventory management systems designed to deliver less merchandise on a more frequent basis than traditional inventory systems
What is QR?
Quick Response is an inventory management system used in retailing; merchandise is received just in time for sale when the customer wants it
What is lead time?
The amount of time between the recognition that an order needs to be placed and the arrival of the needed merchandise at the seller’s store, ready for sale