Mckinsey Study Backs Cost-To-Serve Wholesaler Model

Topics:
Direct and Indirect Sales Channels
Tags:
Business Operations,
McKinsey & Co.,
Retail,
Retail Company,
Supply Chain,
Wholesaler
Source:
PRIMEDIA

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Overview: A study by McKinsey & Company, has concluded that a cost-to-serve (CTS) wholesaler model — while probably the most difficult to implement — is the best long-term option for a new single-copy distribution system. The McKinsey report points to intensifying financial pressure on retailers as the key variable affecting single-copy performance, and documents the expected operational savings behind retailers' growing push to implement scan-based trading. This is a summary of McKinsey's assessments of CTS and three other potential distribution models. In addition, direct distribution to regional retailer distribution hubs would help ensure continued delivery to as many stores as possible. One should also analyze the economics and potential logistics involved in direct distribution, consider whether there are any conditions under which they would be willing to co-invest in acquiring a wholesaler, and think through how they will respond if the distribution channel remains unchanged and they must absorb higher distribution costs.

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Format: HTML | Date: Jan 2002 | Pages: 1

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