Channel intermediaries

Q&A: J.J

How does your company create value using the functions of channel intermediaries? Why is this concept important?

One of the most interesting things I learned while working in Logistics at Target was the quantity of boxes that came in via UPS/Fed Ex/etc. from small manufacturers (or individual people). These items were all jewelry items but it showed that Target was taking a small company's or an individual's unique product and putting it in their stores to be sold. This is a direct reflection of how a large-name retailer such as Target can have a significant impact on adding value to the original product by being a channel of distribution. Typically, the product may only see local boutique stores or craft fair audiences but through the merchant middlemen (buyers) of Target, the product is able to receive mass distribution and the small business and Target both profit from the added value in the long run.

This is important because it allows the retailer to have a wider breadth of products available that are unique and entice the customer. It also breathes life into the small business or individual artist who is creating the products to be sold. Both parties find benefit within the chain and are better for it.

Q&A: K.S

How does your company create value using the functions of channel intermediaries? Why is this concept important?

When we book different artists on campus, we work through agents to make that happen. When talking about contractual details, we rarely if at all, talk directly to the artist. It is sometimes hard to get a hold of the artist until the actual day of the performance. They have shows prior to ours so the most current show is what they are focusing on.

For larger shows, we typically work through a middle buyer/middle agent. What they basically do is act and an intermediary between us, the university, and the artist's agent. There is a lot more that goes into contracts for a larger show and the middle buyer works on negotiating them back and forth between us and the agent. Sometimes the agent and artist are also very particular with the promotions if we book them during a certain tour. We have to get everything approved ahead of time. If we wouldn't use a middle buyer for larger shows, it would be mass chaos. They also let us know potential opportunities that come up if a certain artist is routed through our area. The current middle buyer we go through charges 10% per show which is definitely worth it when you are already investing as much money as we do into one performance.

Q&A: L.S

How does your company create value using the functions of channel intermediaries? Why is this concept important?

Marshall and Johnston make the point that these intermediaries, called middlemen at times, "play a role in the exchange process between producer and consumer" (415). In my company, which is a hospital, the producer is the hospital and the consumer is the patient. The offering provided by the hospital is patient care and services. Agent intermediaries, defined as Marshall and Johnston as not taking title to the product, serve multiple functions providing value to the supply chain of the hospital (415). Physical distribution functions of these channel intermediaries include accumulating bulk and sorting, creating assortments, reducing transactions, and transportation and storage. For example, wholesalers and distributors take in products and supplies from multiple sources. These include medications, medical supplies, and equipment. These distributors then offer the products to our hospital. This would be an example of accumulating bulk and sorting. Because the distributors are accumulating large amounts of products they can negotiate pricing with manufacturers, thus, offering a better price to us than we could get if buying outright from manufacturers. Because we are buying from large wholesalers and distributors that have a multitude of products and supplies, it greatly reduces the number of transactions that would be required to acquire all the goods necessary to operate the hospital. If not for these intermediaries we would have to work with a much larger number of companies. This would require more human resources, more electronic communications and interfacing, and additional delivery expenses. The intermediaries also have large amounts of products which can be delivered within 1-2 days. This allows us to keep a reasonable onsite inventory reducing our inventory expenses and reducing the amount of physical space required for storage. It also reduces expenses from products and supplies that may become outdated because our supple turnaround is quick. These intermediaries also serve to research products and complete product market research - what are the best products at the best prices. This reduces the time and effort spent doing this by our company, which in the other channel intermediary functions if facilitating. This proves to be advantageous to our company also. The distributors and wholesalers take on the risk of storing large amounts of medications or medical supplies and equipment. They take on the risk of product outdating saving our company from this worry. From this discussion it is quite obvious that the channel agent intermediaries serve a vital and beneficial function for our hospital.