Question

In: Operations Management

Why does Distribution play an important role in the Supply Chain of all companies?

Why does Distribution play an important role in the Supply Chain of all companies?

Solutions

Expert Solution

The distribution includes the flow of products from the manufacturers to the end-users. It plays an essential role in the supply chain of all the companies irrespective of what kinds of goods are produced by the companies. This is so because distribution makes it possible to place the products in the hands of the end-user at the proper time and proper price. If a company fails to select a proper distribution channel, the effort and the expenses involved in the production of the products would get wasted. Distribution performs the following roles:

1. Distribution balances the demand and supply of the product. The distribution systems help in assembling and delivering the necessary goods to the point of requirement.

2. The distribution systems provide support to the company’s manufacturing operation in decreasing their costs through long production runs.

3. The distribution facilities help in protecting the inventory against the uncertainties such as demand spikes, supply disruptions, and forecasting errors.

Thus, distribution plays an essential role in the supply chain.

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