The Distribution Management Environment

In Chapter 1, the supply chain is described as a network consisting of suppliers, producers, channel intermediaries, and customers. Classically, each supply chain entity performs a detailed set of channel functions. The mission of suppliers is to provide materials to producers who make finished goods that in turn are warehoused and distributed by channel intermediaries to the end-customer. This compartmentalized view of the supply chain, while providing recognizable silos into which channel businesses are easily grouped, does not correspond to how channel processes actually work. Many manufacturers bypass the use of intermediaries and perform distribution functions such as finished goods storage, channel management, and delivery to customers. In turn, many channel intermediaries pursue light manufacturing and postponement strategies. Instead of rigid boundaries, the performance of channel functions are not the preserve of anyone channel entity but depend on the way a company responds to the challenges driven by business objectives and strategies, marketplace requirements, the nature of the product and the production process, and the expectations of the customer.