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Learn about the physical distribution channels used to transfer products from production to the final customer. Explore different types of distribution channels and their structures.
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Channels of Distribution Andi Wijayanto, S.Sos., M.Si
PENGERTIAN • Physical distribution channel is the term used to describe the method and means bywhich a product or a group of products are physically transferred, or distributed,from their point of production to the point at which they are made available to thefinal customer. • Saluran Distribusi diartikan sebagai suatu jalur yang dilalui oleh arus barang-barang dari produsen ke perantara dan pemakai akhir (David A. Revzan) • Organisasi dalam dan luar perusahaan yang terdiri atas agen, dealer, pedagang besar dan pengecer, yang melaluinya sebuah komoditi, produk atau jasa dipasarkan (American Marketing Association).
Jenis dan Struktur Saluran Distribusi Fisik Alternative distribution channels for consumer products to retail outlets
The Alternative Channels: • Manufacturer Direct To Retail Store. The manufacturer or supplier deliversdirect from the production point to the retail store. As a general rule, thischannel is only used when full vehicle loads are being delivered. • Manufacturer Via Manufacturer's Distribution Operation To Retail Store. The manufacturer or supplier holds its productsin a finished goods warehouse, a central distribution centre (CDC) or a series ofregional distribution centres (RDCs). The products are trunked (line-hauled) inlarge vehicles to the sites, where they are stored and then broken down intoindividual orders that are delivered to retail stores on the supplier's retaildelivery vehicles.
The Alternative Channels: • Manufacturer Via Retailer Distribution Centre to Retail Store. Manufacturers supplying their products to National DistributionCentres (NDCs), which are sites run by the retail organizations. The retailers then deliver full vehicle loads of all the different manufacturersproducts to their own stores. Most retailers now use third parties to run these finaldelivery operations. • Manufacturer to Wholesaler to Retail Shop. Wholesalers acted as the intermediaries in distribution chains, providing the link between themanufacturer and the small retailers' shops.
The Alternative Channels: • Manufacturer to cash-and-carry wholesaler to retail shop. These are usually built around a wholesale organization and consistof small independent shops collecting their orders from regional wholesalers,rather than having them delivered. The increase in cash-and-carry facilitieshas arisen as many suppliers will not deliver direct to small shops because theorder quantities are very small. • Manufacturer via third-party distribution service to retail shop. A number of companies have developed a particular expertise in warehousingand distribution. These companies consist of those offering general distributionservices as well as those that concentrate on providing a 'specialist' service forone type of product or for one clientcompany.
The Alternative Channels: • Manufacturer via small parcels carrier to retail shop. Very similar to theprevious physical distribution channel, these companies provide a 'specialist‘distribution service where the 'product' is any small parcel. The competition generated by thesecompanies has been quite fierce. • Manufacturer via broker to retail shop. A broker is similar to a wholesaler in that it acts asintermediary between manufacturer and retailer. Its role is different, however,because it is often more concerned with the marketing of a series of products,and not really with their physical distribution. Thus, a broker may use third-party distributors, or it may have its own warehouse and delivery system. Thebroker can provide an alternative physical distribution channel.
Additional Channels For Industrial Products • Mail order. Goods are ordered by catalogue, and delivered to the home by post orparcels carrier. The physical distribution channel is thus from manufacturer tomail order house as a conventional trunking (line-haul) operation, and then tothe consumer's home by post or parcels carrier, bypassing the retail store. • Factory direct to home. It can occur by direct selling methods, often as a result of newspaperadvertising. It is also commonly used for one-off products that are speciallymade and do not need to be stocked in a warehouse to provide a particularlevel of service to the customer.
Additional Channels For Industrial Products • Internet and shopping from home. Initial physical distribution channelswere similar to those used by mail order operations - by post and parcels carrier.The move to internet shopping for grocery products has led to the introductionof specialist home delivery distribution operations. These are almost all run bythird-party companies. In addition, it is now possible to distribute someproducts, such as music, software and films, directly, computer to computer. • Factory to factory/business to business. The factory-to-factory or business-to-business channel is an extremely important one, as it includes all of the movement of industrial products, of which there are very many. This may cover rawmaterials, components, part-assembled products, etc. Options vary according tothe type and size of product and order, may range from full loads to smallparcels, and may be undertaken by the manufacturers themselves or by a thirdparty.
The Main Differences Among Channel Structures Are: • The types of intermediaries (as shown above); • the number of levels of intermediaries (how many companies handle theproduct); • the intensity of distribution at each level (ie: are all or just selectiveintermediaries used at the different levels?).
Channel Selection Normally be considered by a company in the course of its distribution planning process to ensure that the most appropriate channel structure is developed: • To make the product readily available to the market consumers at which it is aimed.The most important factor here is to ensure that the product isrepresented in the right type of outlet or retail store. Having identified thecorrect marketplace for the goods, the company must make certain that theappropriate physical distribution channel is selected to achieve this objective. • To enhance the prospect of sales being made. This can be achieved in a number ofways. The most appropriate factors for each product or type of retail store willbe reflected in the choice of channel. The general aims are to get good positionsand displays in the store, and to gain the active support of the retailsalesperson, if necessary. The product should be 'visible, accessible andattractively displayed'. Channel choice is affected by this objective in a number ofways: - Does the deliverer arrange the merchandise in the shop? - Are special displays used? - Does the product need to be demonstrated or explained? - Is there a special promotion of the product?
CHANNEL SELECTION • To achieve co-operation with regard to any relevant distribution factors. These factorsmay be from the supplier's or the receiver's point of view, and include minimumorder sizes, unit load types, product handling characteristics, materials handlingaids, delivery access (eg vehicle size) and delivery time constraints, etc. • To achieve a given level of service. Once again, from both the supplier's and thecustomer's viewpoints, a specified level of service should be established, measured and maintained. The customer normally sees this as crucial, and relativeperformance in achieving service level requirements is often used to comparesuppliers and may be the basis for subsequent buying decisions.
CHANNEL SELECTION • To minimize logistics and total costs. Clearly, costs are very important, as they arereflected in the final price of the product. The selected channel will reflect acertain cost, and this cost must be assessed in relation to the type of productoffered and the level of service required. • To receive fast and accurate feedback of information. A good flow of relevantinformation is essential for the provision and maintenance of an efficientdistribution service. It will include sales trends, inventory levels, damagereports, service levels, cost monitoring, etc.
Types Of Third-party Distribution Operation • Dedicated (or exclusive) distribution operation. This is where a completedistribution operation is provided by a third-party company. The third partyundertakes to provide the customer with all its distribution requirements,exclusively, on a national or regional basis. The resources used will includewarehouses, distribution centres, transport fleets, managers, etc. These areobviously confined to very large companies. • Multi-user (or shared-user) distribution operation. Similar to dedicated operations, the principal difference being that asmall group of client companies is catered for, rather than just a single client.One of the characteristics of this type of service is that ideally the clients areall manufacturers or suppliers of goods and their products are all delivered tothe same or similar customers, for example grocery products to grocery stores,supermarkets, catering establishments, etc. These are also known as shareduser operations. The advantage of this approach is that expensive distributioncosts are shared between the clients, so all parties enjoy the benefits.
Types Of Third-party Distribution Operation • Specialist distribution operation. These distribution operations are used for thestorage and movement of products that require special facilities or services,and the distribution operation run by the third-party company is especiallytailored to suit these needs. There are several examples, such as frozen foodand hanging garment distribution. • Regional multi-client distribution operation. These operations are provided for anynumber of clients and for most product types. They are usually provided by a 'general' third-party distributor that has probably started as a very smalloperation and grown into a regional operation concentrated in a specific smallgeographic area.
Types Of Third-party Distribution Operation • National multi-client distribution operation.Similar to theprevious one, a service being provided for any number of clients and producttypes. The main difference relates to the size of theoperation. This isnationwide, and would include a trunking (line-haul) operation between thecompanies' sites, so that if necessary a client company can have adeliveryservice to anywhere in the country. • Satellite or cross-docking operation. These are operations where the operator isnot involved in the storage of any products, but is only providing a collect,break-bulk and delivery service. Thus, no unordered stocks are held, althoughsome minor stockholding may occur for a limited number of product lines.
Types Of Third-party Distribution Operation • Joint venture. A limited number of operations have been set up whereby a third-party operator and a client company form a separate distribution companycalled a joint venture. This may occur where a company with its own distributionoperation has some underutilized resources. It will then link up with a third-party operator and offer the services on a wider basis. This has occurred in thehanging goods and the high-tech sectors. • International distribution operations. These may be dedicated but are most likelyto be multi-user, enabling a client to achieve international movements betweensites and delivery to final customers over a broad international area. • Occasional use. Many companies use third-party services on an occasionalbasis or as an aid to support their own-account operations. There are anumber of reasons why a company might do this: to cover seasonal peaks indemand; to cover weekly demand peaks; for non-standard products that don'tfit easily into their own operation (very small or very large products); to deliver toperipheral geographic areas where there is only limited demand for theirproducts; or for non-standard operations (returns, collections, etc).
KEY DRIVERS FOR THIRD-PARTY DISTRIBUTION • Cost (capital cost, operating cost, Economies of scale, cost lag or cushion effect, change-over costs) • Service (greater flexibility) • Organizational (concentrate on their core business, oss of control over, the delivery operation, loss of control over the company’s logistical variables, lack the experience, service levels are poorer, balance of power is shifted, loss of distribution and logistics expertise, problem trying to co-ordinate third-party delivery service with a client company’s sales service, loss of direct influence at the point of delivery, brand integrity, the confidentiality of information, cultural incompatibility) • Physical factors (greater flexibility, solve any industrial relations problems, drop characteristics of some products, Vehicle characteristics, Basic delivery systems may be incompatible, Some products may be incompatible)
REFERENSI • Alan Rushton, Phil Croucher, & Peter Baker. 2006. The Handbook Of Logistics And Distribution Management. Kogan Page, Ltd. • Kodrat, David Sukardi. 2009. Manajemen Distribusi Berbasis Teori dan Praktek. Yogyakarta: Graha Ilmu. • Slide ini dapat anda download di: http://andiwijayanto.blog.undip.ac.id
