12.5 Integrated Supply Chain Management and the Distribution Strategy

Earlier in this module we discussed the definition of supply chain and the difference between the supply chain and marketing channels. As a reminder, the supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer. Supply chain activities involve the transformation of natural resources, raw materials, and components into a finished product that is delivered to the end customer.^[1]

The marketing channel generally focuses on how to increase value to the customer by having the right product in the right place at the right price at the moment the customer wants to buy. The emphasis is on the providing value to the customer, and the marketing objectives usually focus on what is needed to delivery that value.

The primary differences between the two are the following:

1. The supply chain is broader than marketing channels.
2. Marketing channels are purely customer facing, while supply chain encompasses internal objectives as well.
3. Marketing channels are one part of the marketing mix that must be balanced with product, price, and promotion.

In this section we are going to get into the supply chain in more detail. Our goal here is to understand the contributions of integrated supply chain management in order to be able to create a more effective distribution strategy.