Developments in Distribution Channels : A Case Study of a Timber Product Distribution Channel

Abstract: This thesis describes and analyses the trends and developments of actors along distribution channel. In particular, the study focuses on resellers and manufacturer based on the empirical material from one particular case study. The study has three main goals: (1) to investigate the challenges arising from channel actor developments, the effects of these developments on the structure of the retailer supply chain and their implications for manufacturers and suppliers, (2) to identify explanations for manufacturer’s vertical integration of distribution and the resulting impacts and, (3) to conduct a preliminary customer value analysis relating to the distribution channel of solid wood products.The study has taken an exploratory and qualitative research approach with an abductive reasoning process. A case study strategy was adopted, which studied a distribution channel consisting of a Sweden-based timber manufacturer that vertically integrated a distributor in the UK. Semi-structured interviews comprised the primary data collection technique in this study. A two-step data collection process was conducted between May 2009 and April 2010, including 29 interviews with 24 interviewees from eight organizations, representing the manufacturer, distributor and reseller in the distribution channel. Non-participating observations were carried out by attending sales meeting and joining account managers on store visits. All interviews were documented and transcribed and the information was collated into case units, along with any supporting secondary data, such as company magazines, web resources, annual reports, sales reports, meeting presentations, etc.This thesis has produced several findings. Reseller developments have promoted the formation of reseller demands, such as integrated solutions with respects to logistics, marketing, merchandising, innovation, etc. Retailer developments have driven the change of a retailer supply chain structure, and have opened up a number of new questions to be posed on manufacturer and its positioning in the supply chain. The most important factors driving the manufacturer’s vertical integration of distribution are customer demands, the manufacturer’s repositioning strategy with regard to its business focus and its positioning in the supply chain. The vertical integration of distribution transforms the manufacturer into a direct supplier to large timber product resellers. It also offers the supplier a great opportunity to enhance offerings and establish strategic relationship with customers. The output of suppliers has expanded from solely manufacturing goods to also include services and knowledge associated with goods. In practice, it can be complicated for a supplier to create and communicate value. A full understanding of what timber product customers seek in terms of value elements has not yet been achieved. This study has assisted in terms of understanding the differing value that channel actors place on a range of product, physical distribution, service and supplier value elements by developing a value analysis framework. Suppliers can use this framework when designing, customizing and marketing offerings for customers.