Distribution Management

CHAPTER 6
INTERNATIONAL DISTRIBUTION



International Distribution

•International distribution is the
processes, relationships and fulfilment
that we set in place to get our products
into overseas markets. International
distribution is about wholesaling into
new countries.



Distribution Channel

• A distribution channel is a chain of businesses or
intermediaries through which a good or service
passes until it reaches the end consumer.
• It can include wholesalers, retailers, distributors and
even the internet itself.
• Channels are broken into direct and indirect forms,
with a "direct" channel allowing the consumer to
buy the good from the manufacturer, and an
"indirect" channel allowing the consumer to buy
the good from a wholesaler or retailer.



Types of Distribution Channels

•Three Types of Distribution Channels
There are three main types of channels,
all of which include a combination of a
producer, wholesaler, retailer and end
consumer.

• The first channel is the longest in that it includes all
four, from producer to the end consumer.

• The wine and adult beverage industry is a perfect
example of this long distribution channel.

• In this industry, thanks to laws born out of prohibition,
a winery cannot sell directly to a retailer. It operates in
what is known as the three-tier system, meaning the
winery is required by law to first sell its product to a
wholesaler, who then sells to a retailer.

• The retailer, in turn, sells the product to the end
consumer.

•The second channel is one where the
producer sells directly to a retailer, who then
sells the producer's product to the end
consumer. This means the second channel
contains only one intermediary. Dell, for
example, is large enough where it can sell its
products directly to reputable retailers such
as Best Buy.

•The third and final channel is a direct to
consumer model where the producer sells its
product directly to the end consumer.
Amazon, using its own platform to sell
Kindles to its customers, is an example of a
direct model, which is the shortest
distribution channel possible.



DEFINITION

• Distribution Network
Entire chain of distribution intermediaries
from the supplier to the consumer across
the boundaries.

INTERNATIONAL TRANSPORTATION

•Transportation is a carriage that used to
move goods from one location to another in
term of logistics.

•International transportation is the goods are
moved from one location to another across
the boundaries by carriage to send the goods
to the customer.

Espack Eurologística offer integrated general
freight transport solutions (SPAIN)

INTERNATIONAL WAREHOUSING

• A warehouse is a commercial building for storage of
goods.
• Warehouses are used by manufacturers, exporters,
wholesalers, retailers, transport businesses, customs
(exporters, importers) and etc.
• They are usually large plain buildings, equipped with
loading docks to load and unload consignment from
trucks.
• International warehouse is goods that being keep for
the purpose of transferring goods across boundaries

e.g : Malaysia Japan

(sugar from Chuping, Perlis)

INTERNATIONAL PURCHASING

Transactions between countries
• Open account
• Cash-in- Advance
• Letter of Credit
• Draft ( bill of exchange)

International Distribution

•The design and management of system that
controls the flow of materials into, through
and out of the international corporation.
•Encompasses the total movement concept
by covering the entire range of operations
concerned with good movement , including
therefore both export and import
simultaneously.

Channel Distribution via different types of mode

International Distribution is of major
concern to the international firm
because its determines how and when
goods will received.



The availability of modes

Ocean Shipping
Water transportation is a key mode for international
freight movement. Three types of vessels operating in
ocean shipping.
1. Linear Service
2. Bulk services
3. Tramp services

Air shipping

Airfreight
• Available to and from most countries.
• High value items are more likely to be
shipped by air, particularly if they have a
high density that is high weight to
volume ratio.

Choices of mode

• The international logistic / distribution
manager must make the appropriate
selection from the modes available. Thus
the consideration of each modes must be
clearly focus:

1. Transit time

2. Predictability

3. Cost

4. Non economic factors

Globalization Forces

• Globalization reflects a business orientation based
orientation based on the belief that the world is
becoming more homogenous and that distinctions
between national markets are not only fading but,
for some products, will eventually disappear.
• As a result companies need to globalize their
international strategy by formulating it across
markets to take advantage of underlying market,
cost, environmental and competitive factors.

Forces of globalization

1. Market factor
• The world customer has gained a new meaning
today.
• Channel of distribution also becoming more global
that is a growing number of retailers are now
showing great flexibility in their strategies for
entering new geographic markets.
• The existence of cross border retail alliances, which
expand the presence of retailers to new markets
quite rapidly.

2. Cost factor
• Avoiding cost inefficiencies and
duplication of effort are two of the most
powerful globalization drivers.

3. Environmental factors
• Government barriers
• Rapid technological evolution.

4. Competitive factors.
•To remain competitive a company may
have to be the first to do something or
to be able to match or preempt
competitors move.
•Globalizing distribution network.

Global Strategies

•The plans developed by an organization
to target growth on a global level for
sales of products or services.

1.Environmental analysis
2. Global strategic planning
3. Organizational infrastructure
4. Implementation
5. Performance measurement