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Developments in Distribution Channels: A Case Study of a Timber Product Distribution Channel
Linköping University, Department of Management and Engineering, Industrial Marketing and Industrial Economics. Linköping University, The Institute of Technology.
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.
Series
Linköping Studies in Science and Technology. Thesis, ISSN 0280-7971 ; 1358
National Category
Other Mechanical Engineering
Identifiers
URN: urn:nbn:se:liu:diva-64362Local ID: LiU-TEK-LIC 2010:29ISBN: 978-91-7393-268-4 (print)OAI: oai:DiVA.org:liu-64362DiVA: diva2:389738
Presentation
2010-12-20, 3C:817, A Building, Campus Valla, Linköpings universitet, Linköping, 13:00 (English)
Opponent
Supervisors
Available from: 2011-01-20 Created: 2011-01-20 Last updated: 2011-03-23Bibliographically approved
List of papers
1. Development in Building Material Distribution and Its Consequences for Suppliers
Open this publication in new window or tab >>Development in Building Material Distribution and Its Consequences for Suppliers
2009 (English)Conference paper, Published 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.

Keyword
Distribution channel, DIY retailers, builders’ merchants, timber products
National Category
Engineering and Technology
Identifiers
urn:nbn:se:liu:diva-63133 (URN)978-1-904564-30-0 (ISBN)
Conference
14th Annual Logistics Research Network Conference, 9-11 September, Cardiff, Wales, UK
Projects
Leen Wood Engineering (LWE)
Available from: 2010-12-12 Created: 2010-12-12 Last updated: 2011-08-24
2. From manufacturer to supplier: Driving forces and consequences
Open this publication in new window or tab >>From manufacturer to supplier: Driving forces and consequences
(English)Manuscript (preprint) (Other academic)
Abstract [en]

Purpose Historically, vertical integration is a corporate strategy of interest to the field of strategic management and organizational economics. There is no lack of explanations for vertical integration, among which, transactional cost economics (TCE) provides a theoretical basis for vertical integration. However, the current popularity of vertical integration marks a departure from traditional motivations based on altering industry structure and minimizing cost. Besides, most of the existing studies regarding vertical integration have been conducted at the micro-analytic level but analysis at the supply chain level is sparse, which might be more relevant and significant in today’s business environment. The purpose of this paper is exploring the driving forces for vertical integration, particularly downstream integration of distribution and the consequences in a chain of manufacturer-distributor-retailer.

Design/methodology/approach This study takes an exploratory case study research approach. The case chosen was a Swedish-based timber manufacturer that vertically integrated a distribution centre in the UK, thereby becoming a direct supplier to DIY retailers and builders’ merchants. Data was primarily collected through face-to-face interviews that used an open-ended format.

Findings Research findings include that large retail chains’ demands and manufacturer’s reposition strategy, regarding business focus and position in supply chain, are the most important factors driving the manufacturer’s vertical integration of distribution. Vertical integration has transformed the manufacturer into a supplier to large timber product sellers and offered the supplier with greater potential to provide integrated solutions, in turn, become a strategic partner to its customers.

Originality/value This empirical study examines a building material distribution channel, a subject not often studied in extant literature. The study results add empirical evidence to explanations and impacts of vertical integration, especially the integration of customer interface. This study also provides an empirical inquiry of the transformation from product to offering focusing on the retailing context.

 

Keyword
Supply chain integration, Vertical integration, Distribution channel, DIY retailers, Builders’ merchants
National Category
Other Mechanical Engineering
Identifiers
urn:nbn:se:liu:diva-64360 (URN)
Available from: 2011-01-20 Created: 2011-01-20 Last updated: 2011-01-20Bibliographically approved
3. Value Elements Analysis in Distribution Channels: A Case Study of New Timber Product Development for DIY Retailer
Open this publication in new window or tab >>Value Elements Analysis in Distribution Channels: A Case Study of New Timber Product Development for DIY Retailer
2010 (English)Conference paper, Published paper (Other academic)
Abstract [en]

Research in, such as marketing and product development, have shown that understanding customer needs is critical for success. However, a question remain is that manufacturers should create value for which actor (s). Different actors in distribution channel have varied purposes and their perceptions towards value may vary, with potentially conflicting agendas. Most of existing new product development literature has only focused on needs of end consumers or users. Other actors in a supply chain, such as distributor, have less been discussed. This paper examines various tangible and intangible value elements that emphasized by channel actors, particularly the retailer, with a new product launch context. This study adopted an exploratory case study approach. A value element analysis framework is firstly developed based on existing concepts and theories; it is then applied in and adjusted by a case of new timber product launch, in which the authors have researched at primary and secondary level. The findings derived from in-depth interviews demonstrate that retailer is the most important interface between manufacturers and consumers so their needs should be equally emphasized as consumers’ needs. Arguably, retailers’ needs and end consumers’ needs should be considered in different stages of new product development. In addition, this study finds out that although product, distribution, service and supplier attributes are all relevant to retailers, the importance of them varied in the stage of product design and launch. This study also notes that the identification, determination and communication of value is complex issue that could be influenced by many factors thereby can not be determined by one single rule.

Keyword
DIY retailers, timber products, customer value, value elements, new product development
National Category
Engineering and Technology
Identifiers
urn:nbn:se:liu:diva-63131 (URN)
Conference
ISBM Academic Conference 2010: Advances in B-2-B Marketing, August 11-12, Boston, Massachusetts, USA
Projects
Leen Wood Engineering (LWE)
Available from: 2010-12-12 Created: 2010-12-12 Last updated: 2011-01-20Bibliographically approved

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