Chapter 1: Distribution Network

Meaning of Distribution Network:

A distribution network refers to the system or setup through which a company delivers its
products or services to customers. It includes warehousing, transportation, inventory,
wholesalers, retailers, and direct distribution channels.

Importance of Distribution Network:

• Ensures timely delivery of goods

• Helps expand market reach
• Reduces transportation and storage costs
• Enhances customer satisfaction
• Builds competitive advantage

Types of Distribution Networks:

1. Direct Distribution:
o Manufacturer sells directly to consumers.
o Used in online selling or company outlets.
2. Indirect Distribution:
o Involves intermediaries like wholesalers and retailers.
o Suitable for mass distribution.
3. Hybrid Distribution:
o Combination of direct and indirect channels.
4. Centralized Distribution:
o One central warehouse supplies all regions.
5. Decentralized Distribution:
o Multiple warehouses located close to customers.

Factors Influencing Distribution Network Design:

• Nature of the product

• Customer location and expectations
• Transportation cost
• Inventory cost
• Order cycle time
• Service level goals

Chapter 2: Logistics Management

Definition:

Logistics Management is the part of supply chain management that plans, implements, and
controls the efficient and cost-effective flow of goods, services, and related information from
origin to consumption.
 Objectives:

• Efficient movement of goods

• Timely delivery
• Cost reduction
• Inventory control
• Customer satisfaction

Components of Logistics Management:

1. Inbound Logistics:
o Managing materials from suppliers to production.
2. Outbound Logistics:
o Delivering finished goods to customers.
3. Warehousing:
o Storage of goods before dispatch.
4. Inventory Management:
o Balancing demand and supply efficiently.
5. Transportation:
o Movement of goods via road, rail, air, sea.
6. Packaging:
o Protects the product and enhances presentation.
7. Material Handling:
o Efficient handling of goods to reduce damage.

Chapter 3: Channel of Distribution

Meaning:

A channel of distribution is the path through which goods and services pass from producer to
consumer.

Types of Channels:

1. Direct Channel:
o Producer → Consumer (e.g., online, factory outlets)
2. Indirect Channels:
o Producer → Wholesaler → Retailer → Consumer
o Producer → Retailer → Consumer
o Producer → Agent → Wholesaler → Retailer → Consumer

Functions of Channels of Distribution:

• Physical movement of goods

• Promotion and information sharing
• Financing (credit to retailers)
• Risk bearing (storage damage, theft, etc.)
 • After-sales services
• Market feedback to producers

Selection of Distribution Channels:

• Nature of product (perishable, durable)

• Financial resources of the firm
• Market size and location
• Pricing strategy
• Competitor’s distribution strategy
• Product life cycle stage

Chapter 4: Channel Management

Meaning:

Channel management involves designing, monitoring, and improving the performance of

marketing channels. It aims at maintaining strong relations between manufacturers and
intermediaries.

Components of Channel Management:

1. Channel Selection:
o Choosing the right type and number of intermediaries.
2. Channel Training:
o Educating channel members about products and policies.
3. Channel Motivation:
o Providing incentives, commissions, performance bonuses.
4. Channel Evaluation:
o Assessing channel performance regularly.
5. Conflict Resolution:
o Solving disagreements among members regarding margins, territory, etc.

Channel Conflict – Types:

1. Horizontal Conflict:
o Between same level members (e.g., two retailers)
2. Vertical Conflict:
o Between different levels (e.g., producer vs. wholesaler)
3. Multichannel Conflict:
o Conflict due to using multiple channels simultaneously.

Chapter 5: Distribution Logistics

Meaning:
Distribution logistics focuses on the movement of goods from the end of production to the
consumer, ensuring timely, cost-effective delivery.

Functions of Distribution Logistics:

• Order processing
• Inventory control
• Transportation
• Warehousing
• Material handling

Objectives:

• Maintain product availability

• Deliver on time with minimal cost
• Handle returns and replacements
• Maintain service quality

Key Concepts:

• Lead Time: Time between order and delivery.

• Stockouts: Situation when goods are unavailable.
• Fill Rate: Percentage of orders met from available stock.

Chapter 6: Retailing and Wholesaling

Retailing

Definition: Selling goods directly to the final consumer in small quantities.

Types of Retailers:

1. Store Retailers:
o Departmental stores
o Supermarkets
o Convenience stores
o Specialty stores
2. Non-store Retailers:
o E-commerce (Amazon, Flipkart)
o Telemarketing
o Vending machines
o Direct selling (Amway)

Functions of Retailers:
 • Provide product variety
• Offer convenience
• Extend credit
• Offer customer service
• Promote products

Wholesaling

Definition: Selling goods in large quantities to retailers or business users.

Types of Wholesalers:

1. Merchant Wholesalers:
o Take title of goods and resell.
2. Agents and Brokers:
o Do not take ownership, only arrange sales.
3. Manufacturers’ Sales Branches:
o Owned by producers for direct sales.

Functions of Wholesalers:

• Bulk breaking
• Storage
• Credit facility
• Risk bearing
• Transportation
• Market information