The following blog has been written with the intention of explaining the basic terminologies which are used in distribution and supply chain management. Distribution and supply chain management is an integral part of marketing management and the author hopes that the following blog will really be helpful to all the students who are looking forward to take marketing as major. Other students and working professionals can also relate to it.
1> Primary participants:- These are the primary ingredients of any distribution process and are dependent on one another for successful execution of the distribution process. Basically includes Manufacturers, Wholesalers, Retailers & Customers. Primary players take the maximum amount of risk in any distribution process.
2> Specialized participants:- Other than the primary participants there are other businesses that help in facilitating the distribution process, these are known as secondary players. Exp:- Logistics, Warehousing, Information providers, Assemblers, Financers. These are further divided into two parts functional specialist & support specialist.
3> Functional specialists: - These are actively involved in the entire distribution process and help the primary participants in successfully executing their job. Exp:- Logistics, Assemblers, Warehousing, Sequencers etc.
4> Support specialists: - These are not actively involved in the actual distribution process but help in facilitating the distribution process by providing proper support. Exp:- An information provider never plays a direct role in a distribution process but by providing information to help in the purchase of services such as logistics, warehousing ,assembling etc it can support the primary players. Other example includes Financers Insurers, Advertisers etc.
5> Channel structures:-
• Direct selling:- Products /services are sold directly to the customers.
• Central market system:- Produces are sent directly to a central market from where it can be purchased by the customers.
• Multiple channel distribution system:- Commonly used channel arrangement. Consists of more than one channel partner between the manufacturer and the customer.
6> Spin off:- When a dominant player in a channel delegates or subcontracts a part of its functionality to another player ( either for cost advantage or for gaining better expertise ) then this process is known as spin off.
7> Sorting:- Demands are always fluctuating. It varies not only with time but also fluctuates from location to location. Sorting is an broad level concept that aims for designing the distribution channel in such a way that it can fulfill all the time based & geography based fluctuations in demand. Sorting includes Standardization, Accumulation, Allocation & Assortment.
- Standardization:- Collection of uniform products from alternative industries. This is basically performed at the site closer to the manufacturers.
- Accumulation: - Assembling of standard products in large quantity . This is generally done at places nearer to costumers .
- Allocation:- Generally similar kind of products are distributed through the same wholesaler. This is known as allocation. Exp:- fruits, grains, seeds etc are similar kind of products and can be sold through the same wholesaler who has required resources such as cold storage, transportation facility etc available with him.
- Assortment: - Is done at the retailer’s site. It consists of keeping various kinds of products ranging from farm produce to furniture to electronic gadgets in an orderly fashion. Once they are displayed in an orderly fashion customers visit the site and based on their requirements make orders. Thus sorting can satisfy the customer demand in an orderly fashion.
(Author has written the blog for purely theoretical purpose. The blog can be of some help for those people who want to understand the basic idea of supply and distribution management. Though fundamentally intended for MBA students it can also be read by MBA aspirants and working professionals)