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Development in Building Material Distribution and Its Consequences for Suppliers
Linköping University, Department of Management and Engineering. Linköping University, The Institute of Technology.
Linköping University, Department of Management and Engineering, Industrial Marketing and Industrial Economics. Linköping University, The Institute of Technology. (Marketing and Logistics)
2009 (English)Conference paper (Other academic)
Abstract [en]

Purpose: In recent years, a transformation has been observed in the building material distribution channels, in which Do-It-Yourself (DIY) retail chains are pushing more and more responsibilities back to their suppliers. Especially for low value and bulky wood products, there are increasing requirements on suppliers to support retailers’ supply management and in-store business development. This paper aims to investigate the strategic challenges arising from this transformation, thereby obtain a better understanding of building material distributors’ requirements in supply and their consequences for suppliers.

Research Approach: The research approach was primarily exploratory. Qualitative multiple case studies with respondents from wood-based products suppliers and leading DIY retail chains and builders’ merchants in the UK market were conducted. Semi-structured interview and non-participant observation were used to collect data.

Findings and Originality: The strategic aspects of the distribution channel, especially the distribution channel for low value and bulky products-wood based products, have received little research attention. This study indicates that instead of passively taking over the delivery service from retailers, supplier’s proactive strategic moves, such as becoming a “one-stop shop” supplier for distributors by providing complete product portfolios and wide range of service solutions, are changing the structure of supply chain.

Research Impact: It is important to note that distribution channel, a field combining marketing and logistics, provides rich research opportunities. From a theoretical perspective, this paper aims to provide insights into the strategic management of distribution channels and its impact on the value of offerings.

Practical Impact: Findings from the case studies suggest that retail chains are looking for  large suppliers that carry comprehensive product assortment and offer distribution solution as well as in-store support. Consequently, suppliers that used to be production oriented need to widen their focus further down the supply chain, in order to develop offerings that are more aligned with the development in the retail markets. Strategically managed distribution channel is an area that deserves suppliers to pay attention on because it can be a source of long-term competitive advantage.

Place, publisher, year, edition, pages
Keyword [en]
Distribution channel, DIY retailers, builders’ merchants, timber products
National Category
Engineering and Technology
URN: urn:nbn:se:liu:diva-63133ISBN: 978-1-904564-30-0OAI: diva2:376615
14th Annual Logistics Research Network Conference, 9-11 September, Cardiff, Wales, UK
Leen Wood Engineering (LWE)
Available from: 2010-12-12 Created: 2010-12-12 Last updated: 2011-08-24
In thesis
1. Developments in Distribution Channels: A Case Study of a Timber Product Distribution Channel
Open this publication in new window or tab >>Developments in Distribution Channels: A Case Study of a Timber Product Distribution Channel
2010 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

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.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2010. 114 p.
Linköping Studies in Science and Technology. Thesis, ISSN 0280-7971 ; 1358
National Category
Other Mechanical Engineering
urn:nbn:se:liu:diva-64362 (URN)LiU-TEK-LIC 2010:29 (Local ID)978-91-7393-268-4 (ISBN)LiU-TEK-LIC 2010:29 (Archive number)LiU-TEK-LIC 2010:29 (OAI)
2010-12-20, 3C:817, A Building, Campus Valla, Linköpings universitet, Linköping, 13:00 (English)
Available from: 2011-01-20 Created: 2011-01-20 Last updated: 2011-03-23Bibliographically approved

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