Travel Reference
In-Depth Information
Distribution strategies
In discussing distribution strategies in the 1990s, Christopher (1992: 4) noted that they involve
the much wider consideration of logistics related to inventory levels, materials management and
information systems as with transport. While there was an awareness of the need for competitive
distribution strategies, there were still major challenges in the implementation of them because
there was the need for new management skills (Christopher 1986). These skills involve complete
systems management, customer service management and operations coordination.
The literature on distribution strategies shifted focus from internal management of the
organization to a greater emphasis on channel strategy. Gattorna (1994) states that the most
strategically signifi cant challenge facing organizations is the development of a channel strategy.
While the literature in previous decades (Christopher 1986) focused on physical distribution of
tangible products, Gattorna highlights that any progressive organization including service
organizations such as banks, airlines and insurance companies should attempt to select the right
strategy for getting the fi nal product or service to the consumer. However, his defi nition of
distribution channels still refl ects a preoccupation with tangible goods. In order for a distribution
channel structure to be established, authors (Hatton 1994; Chorn 1994) argue that three
determinants emerge. They identify the fi rst as being the requirements of the fi nal customer as
measured by an aggregation of customers with similar requirements. The channel strategy will
therefore depend on the constituents of the segment and what route will reach them best. This
therefore means that e-commerce adoption may be determined by whether the market segment
is predisposed to online or offl ine transactions.
The second determinant is identifi ed as the capabilities of the organization, which supports
the resource-based perspective that says that a fi rm's strategic decisions are in large part infl uenced
by its resources. Capabilities may also refer to management capabilities which were also
highlighted in the literature on ownership and leadership. The third determinant is stated as the
availability and willingness of intermediaries (if needed) to participate in the channel. The
discussion of intermediaries has been limited to their role as a conduit for the supplier; very little
is, however, said about the determinants of their own distribution strategies. Discussions of
channel strategy, however, moved to a broader debate of managing the entire supply chain.
Particularly within the discourse on international distribution it has been posited that there
needs to be the careful management of all companies involved in the distribution of goods and
services (Chorn 1994). This indicates an emphasis on the needs of the fi nal consumer and also
the need for the supplier to use resources in an effi cient, cost-effective manner. The literature,
however, neglects to discuss that the intermediary must also mange the relationship in two
directions within the supply chain.
Schary and Larsen (1998) state that the concept of the supply chain embraces a number of
elements. It identifi es the complete process of providing goods and services to the fi nal user and
brings the actions of supplier and customer into a single system. The main objective of the supply
chain is service to customers; however, this must be balanced against costs and assets. Supply
chain members, however, do not do this on their own, as individual achievement is dependent
on the performance of the chain as a whole. It is the management of a network of interconnected
businesses involved in the ultimate provision of product and service packages required by end
customers (Harland 1996). The travel supply chain involves the supplier, wholesaler, retailer and
consumer. The supplier here represents those creating and providing the service such as airlines,
hotels, attractions and car rental companies. The wholesaler refers to tour operators such as
Thomas Cook and Thomson Travel who create packages while retailers are travel agencies which
sell directly to customers in the marketplace. It is clear that as the customer contact agent, an
