Speak about advantages and disadvantages of different forms of distribution channels.
![]() ![]() | Asking for opinions |
I’m convinced that … I feel quite sure that … It’s perfectly clear to me that … From financial point of view … I’m inclined to think that … I tend to favour the view that … | Giving opinions |
![]() | Agreement |
![]() | Disagreement |
![]() | Expressing reservations and doubts |
![]() | Neutral suggestions |
![]() | Tentative suggestions |
Forms of Distribution Channels
Source Intermediaries or “Middlemen” | Advantages | Disadvantages | ||
Distributors Buy and resell goods. Accept orders and payment. Assume warranty responsibility. May offer customer training. | Handle cultural, commercial, and technical problems. If delivery in United States, payment in dollars, standard terms. Simple handling of product defects. | Among the most costly sources; buyer pays both manufacturer’s and distributor’s profit and overhead. Probably foreign currency, L/C terms. (Letter of credit) | ||
Manufacturer’s Representatives Accept orders on behalf of a source; receive commission for the service. May provide technical and commercial support. | Handle cultural, commercial, and technical problems. Generally less expensive to use than a distributor. | Payment in foreign currency. L/C terms if a foreign rep. company. Bears no warranty liability; little use in dealing with defects. | ||
Brokers Bring together parties to a transaction for a fee. Services vary widely. | Least expensive intermediary. Wide range of services possible. May have wide contacts in the industry. Most willing to negotiate. | Least responsible for source or product performance, warranty. Probably little technical support. Foreign currency, L/C terms probable. | ||
Trading Companies Broad scope of activities from brokering, representation, distribution, program management. | Worldwide contacts, broadest scope of sources. Experience and capability. Few cultural or language problems. | Generally a costly alternative. Most prefer to trade in existing markets or to make a market for new product, not to deal in isolated inquiries. Because of their scale, most buyers have little leverage. |
SUPPLEMENTARY UNIT
A new distribution model
This unit considers how supply chains will need to change in the future as a result of higher energy prices and concerns about carbon emissions.
Before you read
Discuss these questions.
1. | What are some traditional strategies and aims of running supply chains? |
2. | What new factors will companies have to take into account when designing their supply chains? |
3. | In what ways can a company reduce transport costs in its supply chain? |
4. | Think of as many ways as possible to reduce carbon emissions in freight transport. |
Reading