Explain Channel of distribution, Supply Chain Management and Logistics Management.

The organisations invest heavily in making a product of customer’s choice. If the organisation don’t make arrangements to  deliver or make it available to prospective buyers at the right time and the right place, it is sure to fail in the market. Imagine a customer has to contact the manufacturer for the products like shampoo, soaps, etc. and arrange his own transport. It will be a big hassle for the customer who would rather prefer something that is easily accessible.

Making the products available effectively and efficiently to the end consumers is taken care under the place concept of the marketing mix also known as marketing channel or distribution channel. Decisions concerning distribution channels are of utmost importance to manufacturers. It is concerned with how the product gets through the producer to the consumer. Most of the manufacturers do not sell the products to the end users. They use a set of intermediaries which perform different roles in the channel network. Each member in this chain or channel serves as a link in the distribution network linking the manufacturer to the end user.

Supply Chain Management involves the management of materials, information, etc. from the suppliers to the physical distribution of the finished products to the consumers which encompasses logistics, material handling, and purchasing. This area of marketing if properly executed reduces costs to a great extent. This is the reason this arm of marketing is gaining much importance, and organizations constantly strive to employ a right candidate for this role.

Management of the supply of materials and information from the suppliers (source) to the end customer is Supply Chain Management. All the organizations that are part of the process of producing, promoting and delivering a product to the end customers are considered part of the product’s Supply Chain. It begins from the suppliers who provide raw materials, etc. to manufacturers for production and follows the distribution of the finished product till the end consumer. This includes the storage activity as well of the materials and products. Supply chain management encompasses the flow of materials and information up and down the chain.

All the activities of managing the supply as well as storage incurs the costs for the organization. Marketers strive to bring efficiency in this function to reduce the costs. These costs finally get added to the price of the product. If this function is managed most efficiently, the price of the final product will be less and will help the organization gain competitive advantage. It also gives great opportunity to increase the cost to profit margin and increased profits to the organization. Reducing costs is part of supply chain. Value Chain is another term used interchangeably with the term supply chain.

Definition of Supply Chain Management –
“Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management Activities.”– Council of Supply Chain Management Professionals.

Most of the organizations produce products at a certain location for efficiency through large-scale production. The buyers of these products are spread all over the world. This necessitates the function of making the products available to buyers. This function of connecting the manufacturer with the buyers by distribution of goods and information comes under Marketing Channels.

Marketing Channel involves all the people and organizations that are focused on providing value to the customer (downstream) via buying, selling and promoting the product to the customers. These organizations that perform the marketing activities of buying, selling and promoting a product are called as intermediaries, middlemen or resellers.

For example, the producer of raw materials that supplies these to the manufacturers for making a product forms part of the Supply Chain and not Marketing Channel.

Marketing channel is only concerned about the channel flows (physical goods, ownership, payments, etc.) to-and-fro among manufacturer, any intermediaries, and end consumers. These are set of organizations linked to each other which are concerned with making an offering available for the user. The characteristics of all these organizations (middlemen, intermediaries, resellers) help an organization to determine which of these intermediaries to utilize or to not utilize them at all. That is to make a decision of selling the offering directly to the consumer or via intermediaries. As involvement of marketing channels results in costs, important decisions are made on selection of these channels and designing an effective and efficient marketing channel network.

Definitions of Marketing Channel –
Marketing channels are set of interdependent organizations involved in the process of making a product or service available for use or consumption. –  Philip Kotler.

Marketing channel or Marketing intermediaries are organisations that are responsible for the distribution function of connecting manufacturers to consumers.

One who specialises in performing operations of rendering services that are directly involved in the purchase and sale of goods in process of their flow from producers to the users. – Definition of middlemen by American Marketing Association.

Various intermediaries like wholesalers, retailers, agents, etc. form the marketing channel. Supply chain encompasses all the organisations involved in producing, marketing and delivering of products to consumers. It consists of flow of information and materials upstream as well as downstream. It includes suppliers as well as intermediaries. Supply chain management ensures supply of inbound materials and outbound finished products

Logistics refers to the physical flow of materials in the supply chain. Logistics management is part of the supply chain management that is concerned with planning, implementation and control for effective and efficient flow of goods, services, and information up and down the supply chain.