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Distribution Systems


primary channel function the physical distribution of products
distribution modes *transportation *inventory mgmt *cs functions
sorting process *accumulation *sorting *assorting
accumulation process of assembling & pooling relatively small shipments to be transported for less
sorting process of separating goods by quality, color, or size
assorting a wide variety of merchandise acquired to meet diverse consumer wants *at retail level
direct channels moving goods from the producer to the final consumer without using "middlemen"
indirect channels moving goods with the cooperation and assistance of middlemen
channel width the number of independent members at one level of the distribution channel
channel length the number of levels used to create a distribution channel
intensive dist' strategy selling through every potential outlet that will reach target mkt
selective dist' strategy selling through many but not all potential wholesalers & retailers
exclusive dist' strategy limits the number of outlets employed in one or two intermediaries within each mkt
types of distribution coordination systems *corporate *contractual *administered
corporate dist channel owning all channel members or the firms at the next level in the channel
contractual arrangements specify performance terms for each independent channel member
administered channel operations coordinated thru a dominant channel member
vertical integration acquiring firms that operate at different channel levels* may up ops control
horizontal integration acquiring firms that operate at the same channel level* up mkt share, competitive strength
multiple channels separate dist' channels to reach new mkts, up mkt coverage, or distribute new products
channel control ability to influence the actions of other channel members
channel conflict disagreements between members over practices & policies
horizontal conflicts channel conflicts between firms at the same channel level
vertical conflicts channel conflicts between firms at different channel levels
pushing offering middlemen promos in return for their cooperation IE sales promos, personal selling, and ads
pulling generates consumer demand for the product as a means of securing support w/in the channel. appro for new products
goals of physical distribution cost control& customer service
total cost concept idea that low costs and satisfied customers are conflicting goals
total cost concept goal provide a level of cs at the lowest total costs
distribution center concept cross between one central inventory site (high transport costs) and multi sites (less inventory control)
distribution centers a type of warehouse planned in relation to specific markets
sub-optimization cost reducing actions in one distribution function that increases the overall cost of others
cs standard different buyers need different service levels
order processing the receipt and transmission of sales order information: entry handling delivery
electronic data interchange (edi) a single system of order processing, production, inventory planning and transport
materials handling the physical handling of goods in both the warehouse & transport functions
unit loading refers to the grouping of boxes on a pallet or skid
containerization the process of consolidating many items into one container
warehousing designing and operating facilities for receiving sorting storing moving goods
types of warehouses *private & public *distribution cntrs *bonded storage
order leadtime the average length of time between the customer plaing order and receiving it
reorder point the inventory level at which new orders need to be rplaced to avoid a stockout
stockout a shortage of product resultignfrom carrying too few in inventory
usage rate the rate at which inventory is osd per time poeriod
safety stock the amount of extra inventory kept on hand to avoid stockouts
economic order quantity (eoq) the order size that minmizes the total cost of ordering and carrying inventory
just-in-time (jit) making products an materials available just as needed for porduction or resale
transportation modes the means of moving goods from one location to another
modes of transport railroads trucks waterways airways pipelines
megacarriers freight transport companies that provide several shipment modes
inter-modal transportation two or more transport modes used in combination
freight forwarders specialized agencies providing alternate forms of transport coordination
Created by: forrestree71
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