Supply Chain Management and Distribution Channels

Supply chain management (SCM) can be described as the process of planning managing, executing and improving the key business process that ensure effective delivery of products and services from suppliers through to the end customer as shown in Fig. 18.1 (Helmold & Terry, 2021). Sales and distribution channels can be described as downstream activities of organizations. Distribution (or place) is one of the four elements of the marketing mix. Distribution is the process of making a product or service available for the consumer or business user who needs it. This can be done directly by the producer or service provider or using indirect channels with distributors or intermediaries. The other three elements of the marketing mix are product, pricing and promotion. Decisions about distribution need to be taken in line with a company’s overall strategic vision and mission. Developing a coherent distribution plan is a central component of strategic planning. At the strategic level, there are three broad approaches to distribution, namely, mass, selective and exclusive distribution. The number and type of intermediaries selected largely depend on the strategic approach. The overall distribution channel should add value to the consumer. SCM involves the process of enabling the effective flow of information, materials and services from suppliers from upstream supply chain with raw materials and materials to operation and to finally deliver products and services to end customer or the downstream supply chain. SCM allows the simultaneous integration of customer specifications which is an important aspect that helps in enhancing better performance of the internal process, which ultimately influences greater upstream supplier performance (Werner, 2020). Based on these definitions, it is evident that the common feature of SCM is to enhance end-to-end coordination as a result of effective integrating of both internal and external processes in the supply chain in order to deliver value to the end customer. Therefore, it can be argued to suggest that the potential benefits of an enhanced SCM can be considered to provide higher quality of products or services, effective cost savings, shorter and more reliable delivery times, fewer disruptions and risk reduction. Customer satisfaction and effective service delivery can be seen to be the key factors that enable a business to survive in the highly competitive market (Bozarth & Handfield, 2013). Effective supply chain management (SCM) practices have become valuable in enhancing competitive advantage by reducing waste and increasing efficiency, therefore improving the overall organizational performance and its strategy.