EXERCISE

Answer the following questions. Write your answer in your

notebook.

1. What is distribution channel?

2. What are the different types of distribution channel structures? Give

one example on each type.

Quarter 2 Week 2– A
Enrichment Activity (ABM_PM11-lla-e-18)
The learner should be able to discuss the structure of
distribution channels, its functions, and the nature of
Take a product or service of your choice and trace (and draw a supply chain management.
diagram) the channel of distribution that is used to bring the product or
service to the marketplace.
Republic Act 8293, section 176 states that: No copyright shall subsist in any
work of the Government of the Philippines. However, prior approval of the government
agency or office wherein the work is created shall be necessary for exploitation of such
work for profit. Such agency or office may, among other things, impose as a condition the
payment of royalties.
This ABMPackage is published to be utilized by the Schools Division of Iloilo.
Reference And Photo Credits ALL RIGHTS RESERVED. No part of this learning resource maybe reproduced
or transmitted in any form or by any means electronic or mechanical without written
permission from the Schools Division of Iloilo.
 Principles of Marketing. Rev. ed., Mandaluyong City 1550 Philippines, Anvil Writer: MELLYN JOY M. ALMINAZA
Publishing, Inc., 2014. Graphic Artist: PATRICK T. LOMIGO
 Sketchbubble.com Layout Artist: KRISHEA MAE P. JARUDA
 Cleverism.com Division Quality Assurance: Dr. KIM S. ARCEÑA
 Daywechronicle.com YLEM I. CAGURIN, MATM
 Jianlondon.co.uk EPS I - Mathematics: Dr. KIM S. ARCEÑA
 Aplususapharma.com Management Team:
 Accountlearning.com Dr. Roel F. Bermejo, Dr. Nordy D. Siason, Jr.
Dr. Lilibeth T. Estoque, Dr. Azucena T. Falales
Ruben S. Libutaque, Lilibeth E. Larupay, Dr. Kim S. Arceña

GENERALIZATION
A distribution channel is a set of interdependent organizations involved in
the process of making a product or service available for use or consumption
by the consumer or business user.
Types of Distribution Channel Structure
Channels of distribution can be divided into the direct channel and
the indirect channels. Indirect channels can further be divided into one-level,
two-level, and three-level channels based on the number of intermediaries
between manufacturers and customers.
1. Direct Channel
 are a good distribution model for selling any sort of product that is in the
middle price range, it is not purchased every day, and has long shelf-life.
 Direct distribution would mean that the manufacturer finds a way to
directly communicate to customers without using any market
intermediaries and will deliver the goods themselves.
 The most important aspect of direct distribution marketing is
communication to the end customer. You need to make sure you are
sending the right message.
C. Three-level channels (Manufacturer to Agent to Wholesaler
to Retailer to Customer)
 If a manufacturer choses to work with agents and brokers, they
decide to directly delegate part of their tasks to those Intermediaries.
They act as an extension of the producer in the sense they represent
them before the end customer.
 Before contracting a broker, the manufacturer would have to offer
the stores the production themselves.
 And that is usually the case with smaller vendors. However, as the
business expands, they would look for alternatives for shipping their
product to the store.
 That would be done by a broker to handle the sales, or a distributor,
who would take care to ship the goods to shops in various locations.
EXAMPLES
1. DIRECT Channel Jewellery

2. Indirect Channel Stationery

A. One-level Channels (Manufacturer to Retailer to Customer)
Retailers buy the product from the manufacturer and then sell it
to the customers.. 2. Indirect channels
A. One-level Channels B. Two-level
Channels

B. Two-level channels (Manufacturer to Wholesaler to

Retailer to Customer)
Toys
Wholesalers buy the bulk from the manufacturers, breaks it down
into small packages and sells them to retailers who eventually sell it to the
end customers. Goods which are durable, standardized and somewhat C. Three-level Channels
inexpensive and whose target audience isn’t limited to a confined area use
two-level channel of distribution.

Pharmaceutical wholesaler
 EXERCISE

Answer the following questions. Write your answer in your

notebook.

Which distribution channel function applies most in each of the following

situations?
1. A retailer puts in a rush re-order for a needed Christmas item that is
in short supply.
2. An Internet marketer seeks way to identify and contact its market.
3. A small retailer wants to expand its order size but does not currently
have funds to pay for the expanded order.
4. A business buyer attends a large trade show wanting to buy higher
quality products on a limited budget.

Enrichment Activity
We are now facing a new normal, how will the Internet and telephone
ordering affect distribution systems? Give some examples to illustrate your
thoughts. What products or services will be most affected by these
electronic telecommunication channels?
Reference And Photo Credits
Quarter 2 Week 2– B
(ABM_PM11-lla-e-18)
The learner should be able to discuss the structure of
distribution channels, its functions, and the nature of
supply chain management.
Republic Act 8293, section 176 states that: No copyright shall subsist in any
work of the Government of the Philippines. However, prior approval of the government
agency or office wherein the work is created shall be necessary for exploitation of such
work for profit. Such agency or office may, among other things, impose as a condition the
payment of royalties.
This ABMPackage is published to be utilized by the Schools Division of Iloilo.
ALL RIGHTS RESERVED. No part of this learning resource maybe reproduced
or transmitted in any form or by any means electronic or mechanical without written
permission from the Schools Division of Iloilo.

Writer: MELLYN JOY M. ALMINAZA

o Principles of Marketing. Rev. ed., Mandaluyong City 1550 Philippines, Anvil Graphic Artist: PATRICK T. LOMIGO
Publishing, Inc., 2014. Layout Artist: KRISHEA MAE P. JARUDA
o Wordpress.com Division Quality Assurance: Dr. KIM S. ARCEÑA
o Slideshare.net YLEM I. CAGURIN, MATM
o Didit.com EPS I - Mathematics: Dr. KIM S. ARCEÑA
o Landrover.com Management Team:
Dr. Roel F. Bermejo, Dr. Nordy D. Siason, Jr.
Dr. Lilibeth T. Estoque, Dr. Azucena T. Falales
Ruben S. Libutaque, Lilibeth E. Larupay, Dr. Kim S. Arceña
 GENERALIZATION EXAMPLES
DISTRIBUTION CHANNEL FUNCTIONS 1. Transactional – There is a lot of company using communication
A distribution channel moves goods from producers to consumers. It strategies to make the consumers aware of the products. Example of
overcomes the major time, place and possession gaps that separate goods and which are promotion of a web site via www.did-it.com.
services from those who would use them.
Members of the marketing channel perform many key functions.
They are:
1. Transactional
a. Promotion. Developing and spreading communications about offers
b. Contact. Finding and communicating with prospective (potential) Other example is using of shopping agents such as www.comparenet.com
buyers that allow the consumer to rapidly compare prices and features within
c. Matching – buyers with sellers. product categories.
d. Negotiation. Reaching agreement on price and other terms of the
offer
2. Logistical
a. Physical distribution (such as transportation and storage)
3. Facilitating
a. Information gathering and distribution. Gathering key information
about potential and current customers, and competitors.
b. Risk taking. Assuming some commercial risks by operating the
channel

The question is not whether these functions must be performed but rather
who will perform them. 2. Logistical – www.ups.com and www.fedex.com are the major
distributors and even offer packaging that is specific to products their
If the channel is functioning the way that it should, the work of the channel clients sell.
should be divided so that the various functions can be assigned to the
channel members who can perform them most efficiently and effectively to
provide satisfactory assortments of goods to target consumers.

3. Facilitating – www.mediametrix.com produces a site interaction

report that details to what extent a site shares audience with another site,
showing exclusive and duplicated audience.
 EXERCISE

Multiple Choice. Choose the letter of the best answer. Write it in your
notebook.
1. Which of the following is the right order of supply chain management?:
a. Company, Suppliers, Customers, Resellers
b. Resellers, Company, Suppliers, Customers
c. Suppliers, Resellers, Company, Customers
d. Suppliers, Company, Resellers and Customers
2. Which of the following statement is FALSE?
a. Supply chain management helps to manage daily activities such
as demand management.
b. Supply chain management helps to manage activities such as
day-to-day manufacturing operations.
c. Supply chain management helps to maximize the risks of damaging
or losing of the product.
d. Supply chain management provides effective management to the
company.
3. The following are the objectives of supply chain management, EXCEPT:
a. Supply chain management tries to minimize shortages and keep
costs down. Quarter 2 Week 2– C
b. To Minimize work in progress. (ABM_PM11-lla-e-18)
c. To Reduce transportation cost. The learner should be able to discuss the structure of
d. To decrease distribution channel of the product. distribution channels, its functions, and the nature of
4. Which of the following is an advantage of supply chain management? supply chain management.
a. Maximizes warehouse and transportation costs.
b. Maximizes direct and indirect costs. Republic Act 8293, section 176 states that: No copyright shall subsist in any
c. Develops better customer relationship and service. work of the Government of the Philippines. However, prior approval of the government
d. Both a and b agency or office wherein the work is created shall be necessary for exploitation of such
5. What is a supply chain management? work for profit. Such agency or office may, among other things, impose as a condition the
a. Management of the flow of goods and services and includes all payment of royalties.
This ABMPackage is published to be utilized by the Schools Division of Iloilo.
processes that transform raw materials into final products
ALL RIGHTS RESERVED. No part of this learning resource maybe reproduced
b. It involves the active streamlining of a business’ supply-side or transmitted in any form or by any means electronic or mechanical without written
activities to maximize customer value and gain a competitive permission from the Schools Division of Iloilo.
advantage in the marketplace.
Writer: MELLYN JOY M. ALMINAZA
Enrichment Activity Graphic Artist: PATRICK T. LOMIGO
Layout Artist: KRISHEA MAE P. JARUDA
In this lesson, you have learned about the advantages of supply chain Division Quality Assurance: Dr. KIM S. ARCEÑA
management. Can you think of at least five disadvantages of supply chain
YLEM I. CAGURIN, MATM
management? You can make a read a book or research on it.
EPS I - Mathematics: Dr. KIM S. ARCEÑA
Reference And Photo Credits Management Team:
Dr. Roel F. Bermejo, Dr. Nordy D. Siason, Jr.
o Principles of Marketing. Rev. ed., Mandaluyong City 1550 Dr. Lilibeth T. Estoque, Dr. Azucena T. Falales
Philippines, Anvil Publishing, Inc., 2014. Ruben S. Libutaque, Lilibeth E. Larupay, Dr. Kim S. Arceña
o Tutorialspoint.com , Slideshare.net

GENERALIZATION
SUPPLY CHAIN MANAGEMENT - is the management of the flow of goods
and services and includes all processes that transform raw materials into final
products. It involves the active streamlining of a business’ supply-side
activities to maximize customer value and gain a competitive advantage in
the marketplace.
Supply Chain Management
OBJECTIVES OF SUPPLY CHAIN MANAGEMENT
 Supply chain management tries to minimize shortages and keep costs
down.
 To Minimize work in progress.
 To Reduce transportation cost.
 To increase distribution channel of the product.
 To provide social services by giving them electricity, food, and medicine.
 To make plans and strategy in order to maximize productivity and
achieve on-time performance.
 To increase customer satisfaction by delivering products to consumers
on time and providing fast service.
In the above figure, you can see the flow of goods, services and
information from the producer to the consumer. The picture depicts the
movement of a product from the producer to the manufacturer, who forwards it
to the distributor for shipment. The distributor in turn ships it to the wholesaler
or retailer, who further distributes the products to various shops from where the
customers can easily get the product.
NATURE OF SUPPLY CHAIN MANAGEMENT
 Supply chain management helps to manage daily activities such as demand
management.
 Supply chain management helps to manage activities such as day-to-day
manufacturing operations.
 Supply chain management helps to minimize the risks of damaging or losing
of the product.
 Supply chain management provides effective management to the company.
ADVANTAGES OF SUPPLY CHAIN MANAGEMENT
 Develops better customer relationship and service.
 Creates better delivery mechanisms for products and services in demand with
minimum delay.
 Improvises productivity and business functions.
 Minimizes warehouse and transportation costs.
 Minimizes direct and indirect costs.
 Assists in achieving shipping of right products to the right place at the right
time.
 Enhances inventory management, supporting the successful execution of
just-in-time stock models.
 Assists companies in adapting to the challenges of globalization, economic
upheaval, expanding consumer expectations, and related differences.
 Assists companies in minimizing waste, driving out costs, and achieving
efficiencies throughout the supply chain process
EXAMPLES
Apple Inc. Supply Chain Management
Based on the figure above, you can see that the source of materials used in
making an apple product (Iphone/macbook) came from different countries.
Then, it was manufactured/made in China. It was then stored in two
different warehouse. The product will be distributed through online stores,
retail stores and etc. Finally, within the warranty period the customers can
return the product with defect .
 EXERCISE

I. Fill in the blanks. Write your answer in your notebook.

1. The initial stage of the supply chain process is the ______________stage.

2. ________includes a smooth flow of an item from the producer to the
consumer.
3. In the return stage, ________ or ________ goods are returned to the
supplier by the customer.
4. The fourth stage of supply chain management is _______________.

II. True or False. Write True if the statement is correct and False if
otherwise.
1. In making stage, we mainly concentrate on building a strong
relationship with suppliers of the raw materials required for
production.
2. In return stage, the companies need to deal with customer queries
and respond to their complaints etc.
3. Information/data flow comprises the request for quotation, purchase
order, monthly schedules, engineering change requests, quality
Quarter 2 Week 2– D
complaints and reports on supplier performance from customer side to
(ABM_PM11-lla-e-18)
the supplier.
The learner should be able to discuss the structure of
4. Money flow includes a smooth flow of an item from the producer to
distribution channels, its functions, and the nature of
the consumer.
supply chain management.
5. We do not need to develop a plan or strategy in order to address how
the products and services will satisfy the demands and necessities of
the customers. Republic Act 8293, section 176 states that: No copyright shall subsist in any
work of the Government of the Philippines. However, prior approval of the government
agency or office wherein the work is created shall be necessary for exploitation of such
work for profit. Such agency or office may, among other things, impose as a condition the
payment of royalties.
Enrichment Activity This ABMPackage is published to be utilized by the Schools Division of Iloilo.
ALL RIGHTS RESERVED. No part of this learning resource maybe reproduced
or transmitted in any form or by any means electronic or mechanical without written
Think of any fast-food chains, draw a supply chain management process
from the acquisition of raw material to the consumption of the permission from the Schools Division of Iloilo.
consumers.
Writer: MELLYN JOY M. ALMINAZA
Graphic Artist: PATRICK T. LOMIGO
Layout Artist: KRISHEA MAE P. JARUDA
Reference And Photo Credits Division Quality Assurance: Dr. KIM S. ARCEÑA
YLEM I. CAGURIN, MATM
o Principles of Marketing. Rev. ed., Mandaluyong City 1550
EPS I - Mathematics: Dr. KIM S. ARCEÑA
Philippines, Anvil Publishing, Inc., 2014.
Management Team:
o Supplychainquarterly.com
Dr. Roel F. Bermejo, Dr. Nordy D. Siason, Jr.
o Commercemates.com
Dr. Lilibeth T. Estoque, Dr. Azucena T. Falales
o Slideshare.net
Ruben S. Libutaque, Lilibeth E. Larupay, Dr. Kim S. Arceña
 GENERALIZATION
THREE DIFFERENT TYPES OF FLOW IN SUPPLY CHAIN MANAGEMENT
1. MATERIAL FLOW - Material flow includes a smooth flow of an item
Supply chain management is a process used by companies to from the producer to the consumer. This is possible through various
ensure that their supply chain is efficient and cost-effective. A supply chain is warehouses among distributors, dealers and retailers.
the collection of steps that a company takes to transform raw materials into a 2. INFORMATION/DATA FLOW - Information/data flow comprises the
final product. request for quotation, purchase order, monthly schedules, engineering
change requests, quality complaints and reports on supplier performance
SUPPLY CHAIN MANAGEMENT PROCESS from customer side to the supplier.
1. PLAN - The initial stage of the supply chain process is the planning stage. We 3. MONEY FLOW - On the basis of the invoice raised by the producer, the
need to develop a plan or strategy in order to address how the products clients examine the order for correctness. If the claims are correct,
and services will satisfy the demands and necessities of the customers. In money flows from the clients to the respective producer. Flow of money
this stage, the planning should mainly focus on designing a strategy that is also observed from the producer side to the clients in the form of debit
yields maximum profit. notes.
2. DEVELOP (SOURCE) - After planning, the next step involves developing or
sourcing. In this stage, we mainly concentrate on building a strong EXAMPLES
relationship with suppliers of the raw materials required for production. This
involves not only identifying dependable suppliers but also determining
different planning methods for shipping, delivery, and payment of the
product.
3. MAKE - The third step in the supply chain management process is the
manufacturing or making of products that were demanded by the customer.
In this stage, the products are designed, produced, tested, packaged, and
synchronized for delivery.
4. DELIVER - The fourth stage is the delivery stage. Here the products are
delivered to the customer at the destined location by the supplier. This
stage is basically the logistics phase, where customer orders are accepted,
and delivery of the goods is planned.
5. RETURN - The last and final stage of supply chain management is referred as
the return. In the stage, defective or damaged goods are returned to the
supplier by the customer. Here, the companies need to deal with customer
queries and respond to their complaints etc.

Apple Inc. Supply Chain Management Process

From the above graphic, Apple Inc. accelerates the new
product introduction by acquiring the licensing and 3rd party
businesses. The whole process looks very similar to that of other
industries. The interesting point is that Apple Inc. has to make the
prepayments to some suppliers to secure the strategic raw materials.
 PRINCIPLES OF MARKETING
QUARTER 2 WEEK 2
(ANSWER KEY)

WEEK 2-A WEEK 2-C

Essay 1.d
2. c
3.d
4. c
5.a

WEEK 2-B WEEK 2-D

a. logistical Test I
b. facilitating 1. Plan
c. Transactional 2. Material Flow
d. transactional 3. defective, damaged
4. deliver
Test II-
1. False
2. True
3. True
4. False
5. False