－Chapter 3－
Supply Chain Relationship Management (I):
Channel Structure
Lecturer: Jiuh-Biing Sheu
Department of Business Administration
National Taiwan University
Chapter 3－Outline



Definition－Distribution Channel
Distribution Channel Structure
Channel Relationship Management－background
Global Logistics
－ Concept －
GL strategic planning
(goals & targets)
GL network configurations
channels
SCM
Integrated Logistics management
Marketing
&
Brand
Definition－
Distribution Channel
Business Logistics
－three phases－
Internal logistics (Inventory)
Inbound logistics
Outbound logistics
enterprise
Procurement
Customer order
Extension from Business Logistics
－distribution channel
Other types of
Relationships ?
Transaction relationship
Vender
Order entry
Logistics distribution
Buyer
Concept-1:
Single Distribution Channel
The source member
(more powerful)
The target member
(less powerful)
Interest-induced power interaction
Control ability
Dependency
Concept-2:
One-to-Many Distribution Channel
The target members
(less powerful)
The source member
(more powerful)
…
Why do we need to build channel
relationships? (purposes)

Reducing opportunistic cost
(transaction
cost theory, Williamson, 1979)


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Resource dependence
(resource dependence
theory, Pfeffer and Salancik, 1978)
Risk pooling
Access to end-customers
Channel Relationship Evolution
profit
partnership
Value
sharing
Transactional vs. Relationship
Marketing
Transactional marketing
 a traditional strategy
 focus on creating
successful short-term
transactions between the
company and its
customers
Relationship marketing

a new strategy

focus on the
development of longterm and solid relations
with key supply chain
members
－Distribution Channel－
Properties：
1.Composed of a group of interrelated organizations
2. To overcome the barriers existing in supply chains,
including consumer’s: (1) pre-purchase, (2) inpurchase & (3) post-purchase processes (e.g.,
purchasing green products & product returns)
3. To facilitate the consumers’ utilization of
products/services/information (Stern, El-Ansary &
Coughlan 1996)
Master Kong
－ A Legend of New
Production Introduction to Taiwan Market
康師傅 (Master Kong)
instant noodles in Taiwan
－Distribution Channel－
Properties:
4.To achieve the above
goals, channel
members’ actions may
affect each other


Resource dependence
between channel
members
Channel solidarity
Distribution Channel Structure
Producer
Distribution Channel Structure?
Consumer
Channel Structure
length
width density
Channel length and width
2-tier
3-tier
retailer
retailer
distributer
distributer
wholesaler
length
retailer
consumer
1-tier
producer
width
0-tier
Channel Density
# of mediate members
Between producer and consumer
Exclusive
distribution
Selective
distribution
Intensive
distribution
Channel Design for
Supply Chain Management
Suppliers
Manufacturers
Wholesalers
Retailers
Information/knowledge Flow
Goods & Service Flow
Currency Flow
Process Flow
Consumers
Green Supply Chain Integration
Channel Design for GSCM
Demanded
Products
Raw
Materials
Raw Material
Suppliers
Demanded
Products
Manufacturers
Secondary Material
Market
Reused Raw
Materials
Reusable
materials
Wholesalers
Demanded
Products
Retailers
Demanded
Products
Recycle
Fee
RMF
Demanded
Products
Subsidy
End-Customers
Business Logistics System
Landfills /
Incinerators
Demanded
Products
Useless
Products
Disassembly Plants
Useless
Products
Recycle Plants
Derivative
waste
Collecting Points
Useless
Products
Derivative
waste
Physical Flow
Cash Flow
Reverse Logistics System
Scrap
Products
Useless
Products
Issue 1－
Who should be the one to coordinate chain members?
Issue 2－
Necessary conditions to be a
supply chain coordinator
Issue 3－
Short-term vs. Long-term
Relationship
What you mainly consider？
Your attitude?
Core Value of Channel Theory
Implementation of Enterprise’s
－self-interest－
100% accounting for B-to-B relationships
85% accounting for person-to-person relationships
Channel Relationship Management
－Origin (1/3)

Original from－
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

1960: Industrial Marketing in Northern Europe
Business-to-business: formation of partnership
Need a mechanism to reduce Transaction Costs (Williamson, 1979)
Channel Relationship Management
－Origin (2/3)



Uncertainty in Supply Chain Environments－
Sustainable competitiveness
Previously: channel theory focuses on
manufacturer’s utilization of power to control
channels and resolve channel conflicts
Presently: channel relationship management
 Collaborative relationships
Trend－Supply Chain
Collaboration
Joint
Problem
Solving
Identification
of Joint
Goals
Collaborative
Advantage
Joint
Planning
Joint Action
Chapter 14－Collaboration
Channel Relationship Management
－Origin (3/3)

Morgan & Hunt(1994)－


Commitment and Trust－the key moderator for
relationship marketing
Channel climate in Trust－ facilitate relationship
marketing (in either organization or channel)
Relationship Quality
Developing trust



Real collaboration requires meaningful trust
Power arrangements are often temporary
and create resistance to deeper collaboration
How can trust be developed?
Trust Characterization
Behavioral view

Cognition-based trust is grounded in
perception of actual behavior and operating
performance



Firms incapable of delivering as promised are perceived as
unreliable
Unreliable firms are unworthy of trust in a relationship
Psychological view
Affect-based trust is based on feelings,
culture and philosophy


Perception that partners are interested in (or care) each
other’s welfare
Trusting partners believe that each other will protect the
other’s interest
14-32
Building trust in relationships


Trust building is a time-based
relationship management strategy
Trust is perceived/indicated by:
Willing to Share (有福同享)
Willing to sacrifice (有難同當)
Moderated by timing
(患難見/建真情)
THE END