ESSAY: Channels of Distribution

Channels of Distribution

The reading assignment describes various methods of delivering goods to include Intermediaries, Wholesalers, Agents, etc… Discuss pros and cons of using the various channels of distributing goods.

Required Resources Text

Read the following chapters from the textbook Monkza, R. M., Arnold, J. R., Handfield, R. B., & Guinpero, L. P. (2016). Purchasing and Supply Chain Management. Boston: Cengage. (Links to an external site.)

Chapter 8: Supplier Quality Management (Links to an external site.)
Chapter 9: Supplier Management and Development (Links to an external site.)
Chapter 10: Worldwide Sourcing (Links to an external site.)
Recommended Resource
Multimedia
Institute for Supply Management (2013, July 16).
A career in supply chain

ANSWER

Channels of Distribution

            One of the biggest challenges facing modern business is creating channels of distribution. Deciding to sell products through these channels means a balance must be in a place that will allow the organization to meet its customers’ needs while ensuring the profitability level (Monkza et al., 2016). Some of these channels of distribution include wholesalers, distributors, retailers, intermediaries, and the Internet.

           The wholesale distribution has some advantages, and they comprise ease of scaling, which means revenue will grow faster and is more consistent (Andrejić & Kilibarda, 2016). Wholesaling also ensures marketing is done by others like retailers, thus opening more market opportunities (Anđelković et al., 2017). Another pro is full control over sales. On the other hand, wholesaling has certain demerits such as requiring large capital investments and huge overheads. Additionally, wholesaling may compromise on the quality of products.

           Retailers are also part of the distribution channel. Some of the pros of using retailers as a channel of distribution include the elimination of the intermediaries and related expenses, increased direct customer contact, and provides more distribution control (Monkza et al., 2016). On the other hand, the cons include the reduction in channel options, increased distribution workload, and increased fulfillment costs.

           There is also the Internet (e-commerce) as one of the distribution channels. Some of the pros include lowering of business overhead and costs of operation, greater customer accessibility and sales reach, improved channels of communication, and can integrate valuable tools of reporting (Guo et al., 2017). On the other hand, the cons include difficulty in building trust among retailers, as well as building a relationship with their online customers. There is also limited personal interaction.

References

Anđelković, A., Barac, N., & Radosavljević, M. (2017). Analysis of Distribution Channels’ Successfulness –The Case of the Retail Chains in the Republic of Serbia. Economic Themes, 55(4), 501-519. https://content.sciendo.com/view/journals/ethemes/55/4/article-p501.xml?lang=en

Andrejić, M., & Kilibarda, M. (2016). A framework for measuring and improving efficiency in distribution channels. International Journal for Traffic and Transport Engineering, 6(2), 137-148. https://pdfs.semanticscholar.org/ebbf/75fba437f967f448f0f32ed6c1e7325ac087.pdf

Guo, S., & Heese, H. S. (2017). Product variety and distribution channel structure. International Journal of Production Research, 55(12), 3392-3410. https://www.tandfonline.com/doi/abs/10.1080/00207543.2016.1240380?src=recsys&journalCode=tprs20

Monkza, R. M., Arnold, J. R., Handfield, R. B., & Guinpero, L. P. (2016). Purchasing and Supply Chain Management. Boston: Cengage.