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distributor, however, wholesalers strictly avoid selling to end-users, as this would be akin to competing
with their customers.
And unlike a forward warehouse, wholesalers order, receive, and pay for products from manufacturers,
then handle the order management, fulfillment, and billing functions for a set of distributor customers.
The most sophisticated wholesalers complete the cycle by reporting, in detail, their sales data back to the
manufacturer. This step allows manufacturers to incorporate sales data into their internal systems, allowing
seamless sales reporting, program management, and commission payments to sales rep agencies.
In return for these services, manufacturers generally pay an allowance to their wholesalers, which reflects
the manufacturer’s cost avoidance and other factors which will be discussed in great detail in the coming
chapters.
The Jan-San Supply Chain WITHOUT Wholesaler Redistribution
Manufacturers Distributors End-Users
The Jan-San Supply Chain WITH Wholesaler Redistribution
Manufacturers Wholesaler Distributors End-Users
Note the reduction in less-than-truckload freight ( ) for the manufacturer, and the increase in
truckload freight ( ).
Note also the overall reduction in outbound shipments for the manufacturers, and inbound shipments
for the distributors.
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