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Wholesalers' Contributions to Supply Chain Efficiency
The majority of manufacturers rely on indirect channels of distribution for
their revenues, opting to resell their products through resellers, dealers,
distributors and wholesalers. There are many advantages to relying on an
indirect channel strategy that capitalizes on the strengths of wholesalers.
First, there is the critical role wholesalers provide in supply chains,
completing order aggregation and the pick, pack and ship functions
necessary to fulfill orders from the resellers, dealers, other wholesales,
distributors, and in some cases, direct customers they sell to. The
wholesaler makes it possible for manufacturers to increase the number of
customers sold to without taking on the costs and risks of operating a
direct sales force. The greatest benefit to manufacturers of working with
wholesalers is the ability to reach a significantly larger number of
customers than would otherwise be the case if they worked on their own.
Manufacturers often have completely separate strategies for the managing of
their indirect channels, often having to measure and evaluate the strengths
and weaknesses of strategies at selling more through indirect channels
(Columbus 2003). The use of dashboards has become commonplace in many
manufacturers, as they strive, from the supply chain perspective, to have
visibility back to their suppliers. Conversely when manufacturers are
selling through indirect channels, the need for synchronizing all aspects
of incentives, pricing, warranties, and return policies across wholesalers
is critical. The distribution of sales opportunities, often called lead
generation and escalation, also is a critical in keeping wholesalers loyal
to one specific brand relative to another. The role of the wholesaler is
critical and is a pivotal part of many manufactures' strategies for
increasing sales without significantly increasing the sizes of their sales
forces.
References
Columbus (2003) - Re-evaluate How Your Measure Your Channels' Performance.
AMR Research. Boston, MA December 2, 2003. Accessed from the Internet on
July 18, 2007 from location:
http://www.lwcresearch.com/filesfordownloads/ReevaluateHowYouMeasureYourChan
nelDec2003.pdf
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