The data presented in part I of the article allowed for the calculation of distribution costs for individual channels. The evaluation of distribution channel efficiency was carried out using two methods: the analytical-point method and by comparing incurred distribution costs to sales value in a given distribution channel.
For this purpose, analytical-point method worksheets for evaluating distribution channels were prepared. The level of compliance with individual criteria was assessed on a scale from 1 to 10. The worksheets collected data obtained during interviews with sales specialists responsible for a given market, which allowed for the assessment of criteria and the assignment of individual weights:
− Technical product requirements. Supplying products with high technical requirements to a given recipient necessitates the recipient to undergo a process of approving only that product for their production. This eliminates the possibility of purchasing from a competitor; hence, the higher the technical requirements, the higher the score. This criterion was assigned a weight of 15.
− Adherence to payment terms. Adherence allows for avoiding additional costs associated with providing credit to a given recipient. This criterion was assigned a weight of 10.
− Effectiveness of promotion. If a promotion is effective, it allows for expanding the assortment sold to a given recipient, and furthermore, it is possible to introduce a bonus depending on the quantity of the ordered product. Effective promotion increases sales value in a given channel. This criterion was assigned a weight of 5.
− Scope of control. Here, control over product flow, as well as control over price levels and customer service, is assessed. This criterion was assigned a weight of 10.
− Influence of competition. The greater the competition in a given market area, the lower the possibility of maintaining optimal prices for the enterprise, and consequently, the lower the score. This criterion was assigned a weight of 10. (…)
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Source: Logistyka Magazine 4/2012
1. evaluation of distribution channel efficiency – PDF file for download