MP&PCh5

MP&PCh5 - Chapter 5 Distribution Principles and...

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Chapter 5 Distribution Principles and Processes Copyright 2007 Peter R. Dickson
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Profit: Shareholder value: Ch2 Customer: Ch3 Product: Ch4 Distribution: Ch5 Distribution (Ch.5) distributes what the product development process produces (Ch4) through customer channel segments (Ch3) in ways that increase shareholder value (Ch2). It diffuses product innovations to channel segments through partnerships with distributors. Its processes are constantly being redesigned to increase customer satisfaction and shareholder value.
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In this chapter we first learn about channel functions, mass and specialty distribution. For specialty distribution it is then explained how important channel fit is to competitive success. You will then learn about the fundamentals of distribution channel efficiency and in particular how technology and innovative distribution processes have created first national and then global markets by creating reliable, inexpensive distribution systems.
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You will learn about distribution QFD and how clever innovation in order-delivery process redesign has taken the “pools” of expensive inventory out of distribution systems. You will learn how firms design their delivery service processes around their customers’ needs and not their own needs. We then talk about managing multiple channels, and that takes us to a discussion of what trust is in a trading relationship. We close with a reminder that it all comes down to performance metrics.
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Time and again, distribution process innovation has shaped the prosperity of nations and companies. The first major cities were sea or river ports because it was far less expensive (by an order of magnitude) to move cargo by boat rather than by camel, mule or ox trains. They naturally became trade hubs, the first major centers of trade, commerce and capitalism. And the most cleverly designed port cities such as Venice and Amsterdam were far ahead of their time in that their innovative canal systems enabled ships and barges to unload directly from the water into a merchant’s warehouse and then directly load up other ships and barges that took the cargo to other ports or up river systems.
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It cut the handling costs, the breakage and the theft by roughly half because the cargo did not need to be loaded from boat to wagon and then wagon to warehouse in-bound, and warehouse to wagon and wagon to boat out-bound. These cities enabled their merchants to be far more efficient. They were the giant Wal-Mart distribution centers of their time. Canals were ultimately replaced by railways.
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How markets are made by distribution technology: the railways and the making of the U.S. market The invention of the steam engine, steam ships and railway distribution systems greatly advanced the distribution of particularly perishable agricultural products and raw materials in huge quantities, thus opening up huge markets.
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MP&PCh5 - Chapter 5 Distribution Principles and...

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