Disintermediation is the process of cutting out the middleman in a supply chain. This can be done by manufacturers shipping directly to retailers, bypassing the distributor. Disintermediation can have a lot of benefits for businesses, including reducing costs and improving efficiency. However, it can also cause problems if the manufacturer and retailer are not able to work together effectively.

There are several reasons why businesses might choose to disintermediate their supply chains.

  1. One of the main benefits is that it can reduce costs. By cutting out the middleman, businesses can save money on transportation, storage, and handling. It can also improve efficiency as there is less waste and fewer delays.
  2. Another reason why businesses might choose to disintermediate is to build a direct relationship with the customer. This can be beneficial as it allows businesses to collect data and feedback directly from consumers.
  3. It can also help businesses to create a more personalised customer experience.

However, there are some risks associated with disintermediation.

  1. One of the main risks is that it can lead to conflict between the manufacturer and retailer. If the two parties are not able to work together effectively, it can result in stock outs, late deliveries, and other problems.
  2. In addition, disintermediation can also make it difficult for businesses to change their product mix.

It is important for businesses to evaluate the pros and cons of disintermediation before making a decision.

Related Links

Disintermediation to hit freight brokerage – Logistics Management
The Impact of Disintermediation in Retail Supply Chains

Related Videos