Supply Chains and Distribution Channels
Great news! Your concept passed initial testing and went on to more rigorous, quantitative testing. The results there were promising and you've decided to launch the new product! Now, you need to identify potential suppliers and distribution partners.
For this assignment, create a 5 page paper that contains the following information:
In 1-2 pages, create a list of at least three potential suppliers and describe what they would do for your company (preferably using real-life suppliers, but you may use fictitious names if you can't locate an existing company that supplies that material).
In 1-2 pages, create a list of at least three potential channel partners and describe what they would do for your company (wholesalers, retailers, etc.).
Using the companies listed in your supplier list, create a diagram of suppliers that traces your offering back to its raw materials.
Using the companies listed in your channel partner list, create a flowchart that shows at least three potential pathways to get your product to the consumer.
Include a ½-page write-up that discusses the value that each supplier and channel partner contributes to the development and distribution of your offering.
List of Potential Suppliers and Their Functions
Rupi Company is the company of my choice which basically deals with the manufacture and supply of organic cotton towels. In general, for any company to be successful, it needs to have potential suppliers who are consistent and offer quality service and products. As the owners of the company, we came up with a list of three suppliers who have specific function in the company for its effective and efficient production. The list of suppliers is as follows;
This is a major supplier of the company and is considered as the backbone of the company. The main task of supplier A is to provide raw materials, which in this case is the organic cotton used in making the towels. Both the company and the supplier are interdependent to each other for them to maintain efficient and effective company operations. Supplier A ensures quality raw materials have been provided to the company, in return, the company also ensures the supplier is paid in time to maintain consistency of supply of raw material (Clauss & Spieth, 2016).This interdependence between the supplier and the company in the long run makes the company develop a strong and long term relationship with suppliers. It also leads to offering of quality services by the suppliers to the company and the company treats the suppliers in a fair manner as well. This eventually leads the company to achieve a great competitive advantage. (Lindblom, Olkkonen, Ollila & Hyvönen, 2009)
Supplier B main function is to offer fabrics and decoration materials that are used in decorating the towels into different patterns. The materials provided by supplier B are basically semi final materials. Supplier B should therefore ensure consistent availability of the materials to finish up production of the final product in time. The supplier should also ensure proper product development which attracts more customers; this will eventually result to efficient and effective services that the company offers. (Chung, Talluri & Narasimhan, 2010)
The main function of supplier C is to package the towels. In this case, the suppliers offer services to the company and not products like the other two suppliers. Supplier C should therefore ensure proper packaging and should offer quality services, to enable the company gain greater competitive advantage. (Aßländer, Roloff & Nay?r, 2016)The supplier should also ensure effective communication amongst the suppliers and the company in order to provide a quality end product. The price that the supplier charges for packaging should also be fair price. This will create a good relationship between the supplier and the company as well as it will be beneficial for both. By doing that, the supplier will be able to maintain a long term relationship with the organization. (WAGNER, COLEY & LINDEMANN, 2011)
List of Potential Channel Partners and Their Functions
Goods and services moves from the manufacturer or producer to the end user through a distribution channel. The channel is made up of wholesalers, retailers, intermediaries and distributors. The distribution channel can either be direct channel or indirect channel. Direct channel only involves the customer who purchases directly from manufacturer. (Lindblom & Olkkonen, 2008) Indirect channel involves intermediaries who are wholesalers and retailers. In Rupis Company, we have three potential distribution channels with the following functions.
They act as intermediaries between the company and the end users. Wholesaler’s main function will be; buying organic cotton towels in bulk from the company at a wholesale price and sell it to retailers who will then sell to end users. (Dawson, 2007)
These are close partners to the end users of the product. Their main function will be; purchasing the towels directly from the company and then sell to the end users at a retail price. (Yu, Cadeaux & Song, 2013)Retailers can either be another company purchasing the product for their own use, or it can be a company purchasing the product to supply to end users.
These are potential partners whose function will basically involve; moving the organic cotton towels from the company to the wholesalers, the retailers or the end users. (Xia, Xiao & Zhang, 2012) Distributors will make the whole process of supply chain more efficient, cost saving, effective and fast. In the long run, it will enable the company gain greater competitive advantage.
Flow of products from manufacturer to consumer diagram.
The flow chart above shows the flow of goods and services from the beginning to the end user. First, the raw materials are obtained from the selected supplier for the process of manufacturing to begin. Ones the raw materials gets in to the company, they are processed to semi final products. Other suppliers may be selected to complete the manufacturing process either by decorating the products or putting them in to the required shape. The warehouse is always designed in such a way that it can store both semi final products and final products. After the manufacturing process is complete, the packaging process follows. This can either be done by the company itself or if expertise is needed for proper packaging design, suppliers are outsourced to do so. When the products are ready, the company sells either directly to customers, to wholesalers or through a distributor. Basically, four channels of distribution are always involved. In this case, the products are distributed in three different ways. First, the wholesaler purchases the products in large quantity from the company, then sell to retailers who in turn sells to the end users. Secondly, other firms and consumers, purchase the product directly from the company. Lastly, the retailers purchase the products from the company instead of buying from wholesalers and sale it to end users. The end user finally after using the products until they become waste products, they dispose them and firms collect them and renew them to be used once more as raw materials. This takes the process back to the first stage of supply chain.
Diagram of Suppliers Tracing Raw Materials
The three suppliers and the channel partners have greatly contribute to the development and effective distribution of the company. A supplier ensures raw materials for production have been provided to the company in the right quantity, at the required time and they are of the right quality. The suppliers also, provide proper packaging services of end products before it’s delivered to end users. This consistent flow of materials and proper packaging ensures the operations are more efficient and effective (Milisavljevic, 2013). On the other side, the channel partner who in this case is the wholesalers, retailers and distributors provides an efficient and reliable channel of flow of products. That is from the company to the consumers. The potential channel partners are also source of communication between the company and the consumers, they act as intermediaries between the two parties. They ensure flow of information is effective, efficient and correct as well as the flow of products and services. In conclusion, the suppliers, the potential channel partners and the company should maintain a good relationship and should encourage transparency in all operations, for the company to achieve a greater competitive advantage
ReferencesAßländer, M., Roloff, J., & Nay?r, D. (2016). Suppliers as Stewards? Managing Social Standards in First- and Second-Tier Suppliers. Journal Of Business Ethics, 139(4), 661-683. https://dx.doi.org/10.1007/s10551-016-3148-0
Chung, W., Talluri, S., & Narasimhan, R. (2010). Flexibility or Cost Saving? Sourcing Decisions with Two Suppliers. Decision Sciences, 41(3), 623-650. https://dx.doi.org/10.1111/j.1540-5915.2010.00283.x
Clauss, T., & Spieth, P. (2016). Treat your suppliers right! Aligning strategic innovation orientation in captive supplier relationships with relational and transactional governance mechanisms. R&D Management, 46(S3), 1044-1061. https://dx.doi.org/10.1111/radm.12202
Dawson, J. (2007). Wholesale distribution: The chimera in the channel. The International Review Of Retail, Distribution And Consumer Research, 17(4), 313-326. https://dx.doi.org/10.1080/09593960701507468
Lindblom, A., & Olkkonen, R. (2008). An analysis of suppliers’ roles in category management collaboration. Journal Of Retailing And Consumer Services, 15(1), 1-8. https://dx.doi.org/10.1016/j.jretconser.2007.01.002
Lindblom, A., Olkkonen, R., Ollila, P., & Hyvönen, S. (2009). Suppliers' roles in category management: A study of supplier–retailer relationships in Finland and Sweden. Industrial Marketing Management, 38(8), 1006-1013. https://dx.doi.org/10.1016/j.indmarman.2008.05.004
Milisavljevic, M. (2013). Value oriented strategic marketing. Marketing, 44(4), 299-309. https://dx.doi.org/10.5937/markt1304299m
WAGNER, S., COLEY, L., & LINDEMANN, E. (2011). EFFECTS OF SUPPLIERS' REPUTATION ON THE FUTURE OF BUYER-SUPPLIER RELATIONSHIPS: THE MEDIATING ROLES OF OUTCOME FAIRNESS AND TRUST. Journal Of Supply Chain Management, 47(2), 29-48. https://dx.doi.org/10.1111/j.1745-493x.2011.03225.x
Xia, Y., Xiao, T., & Zhang, G. (2012). Distribution Channel Strategies for a Manufacturer with Complementary Products. Decision Sciences, 44(1), 39-56. https://dx.doi.org/10.1111/j.1540-5915.2012.00381.x
Yu, K., Cadeaux, J., & Song, H. (2013). Distribution Channel Network and Relational Performance: The Intervening Mechanism of Adaptive Distribution Flexibility. Decision Sciences, 44(5), 915-950. https://dx.doi.org/10.1111/deci.12040
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