Placing a Product

Key Takeaways

• Distribution entails all activities involved in getting the right quantity of a product to customers at the right time and at a reasonable cost.
• Companies can sell directly (from stores or over the Internet) or indirectly, through intermediaries – retailers or wholesalers who help move products from producers to end users.
• Retailers buy goods from producers and sell them to consumers, whether in stores, by phone, through direct mailings, or over the Internet.
• Wholesalers (or distributors) buy goods from suppliers and sell them to businesses that will resell or use them.
• Physical distribution – the process of getting products from producers to customers – entails several interrelated activities: warehousing in either a storage warehouse or a distribution center, materials handling (physically moving products or components), and transportation (shipping goods from manufacturing facilities to resellers or customers).
• A firm can produce better-quality products at lower cost and distribute them more effectively by successfully managing its supply chain – the entire range of activities involved in producing and distributing products, from purchasing raw materials, transforming raw materials into finished goods, storing finished goods, and distributing them to customers.
• Effective supply chain management (SCM) requires cooperation, not only among individuals within the organization but also among the company and its suppliers and dealers. In addition, a successful company provides customers with added value by focusing on and improving its value chain – the entire range of its value-creating activities.