The Role of Distribution Channels in the SMEs

The significant feature which distinguishes any company especially the SMEs (Small and medium Scale enterprises) from the others is the implementation of its management system including the production, distribution, marketing, human resource management and so more. It is the responsibility of the owners to make the decisions. It has been observed that majority of the SMEs are one-man enterprises or those formed by two partners. In such a case, the owners are responsible for all the liabilities of the company and the firm’s assets. This ensures that they are ready to bear the risks of the company and the personal risks as well. 

When we talk about the SMEs, it is the sole responsibility of the owners to create a social structure within the organization which is usually liner and follows the autocratic management style. This type of the company structure usually reflects one-man management hierarchy, the decision flow in a quick manner, easy maintenance of discipline, less elastic and flexible activities and so more. Another significant characteristic of the SMEs is the nature of the financial management wherein the capital of such companies is the result of the creations of the funds of the owners (or partners) which is given support by the union funds, loans or credits. An important quality determinant which could be considered by talking about the share in the market is the role of the small and mid-sized companies in the satisfaction of the individual needs of the customers or the clients. This is a significant factor which might outplay the influence created by the demand and the supply.

In addition to the quality of the services offered by the Small and Medium Scale Enterprises (SMEs), the customers or the general public usually make use of the vital characteristics like the number of employees, the value of the assets, the financial results and much more. When talked about the management practices like the distribution channels, the production, the marketing of the goods and services; there could be spotted an issue in the role of the distribution of the competitive advantage of the small and mid-sized companies. The essence and importance of proper distribution channels are represented by the set of activities which focus on the marketing of the products and services in a proper form, time and place. These activities must be balanced with the other marketing factors to stimulate the efficient functioning of the distribution channel in any Small and Medium Scale Enterprises. The main role of an efficient distribution channel is to overcome the time, spatial and ownership barriers which would separate these enterprises from their targeted customers. In addition to these, the distribution channel must be able to provide great customer satisfaction with the best quality on time, in the appropriate place, in the most comfortable way, and at competitive prices. However, this state could be achieved only when the SMEs would adopt an effective distribution channel. The choice of an appropriate distribution channel with a specified structure ensures increased sales volumes and significant throughput and profits. Therefore, proper implementation of the distribution channel within an SME organization can enhance their chances of assured success.

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