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expertise to help design new production facilities. The company has thous<strong>and</strong>s of direct customers<br />

who are supplied directly from a central European store. There are also a large number of<br />

independent distributing companies (distributors) who hold inventory <strong>and</strong> cover every region of the<br />

UK. Distributors hold stock locally <strong>and</strong> offer technical assistance to speedily, <strong>and</strong> cost-effectively,<br />

serve the smaller customers. Unlike the manufacturer, they provide for credit card purchases <strong>and</strong><br />

are willing to take the financial risk of dealing with smaller customers. Another important benefit<br />

distributors give to the manufacturer is in having local sales forces, thus acting as a ‘multiplier’ of<br />

their products, reaching customers that they otherwise would not. The distribution arrangement is<br />

shown in Figure 1.<br />

Figure 1: Market structure. Heavy lines show the flow of orders <strong>and</strong> normal lines show the market relationships<br />

(representing all other kinds of information flow).<br />

Manufacturer's<br />

Central Supplies<br />

Orders<br />

Manufacturer<br />

Order Management<br />

Orders<br />

Internal Sales<br />

Distribution<br />

Team<br />

Regional<br />

Sales 1<br />

Regional<br />

Sales 50<br />

Orders<br />

Distributor<br />

Sales<br />

Distributor<br />

Sales<br />

Customer<br />

Customer<br />

Customer<br />

Customer<br />

VIA<br />

DISTRIBUTION<br />

DIRECT<br />

CUSTOMERS<br />

7

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