1. © 2011 John Wiley and Sons, Inc. All Rights Reserved Selection and Procurement for the Hospitality Industry Purchasing ANDREW HALE FEINSTEIN AND JOHN M. STEFANELLI E i g h t h E d i t i o n

2. © 2011 John Wiley and Sons, Inc. All Rights Reserved CHAPTER Distribution Systems 3

3. © 2011 John Wiley and Sons, Inc. All Rights Reserved YOU SHOULD BE ABLE TO: Summarize the various distribution systems in the hospitality industry Differentiate sources’, intermediaries’, and retailers’ involvement in the supply chain. Distinguish between the economic values added to products and services as they journey through the channel of distribution.

4. © 2011 John Wiley and Sons, Inc. All Rights Reserved DISTRIBUTION SYSTEM There are approximately 945,000 foodservice operations and about 48,062 lodging facilities A typical nonchain hospitality property uses about 10-12 suppliers; multi-unit uses 6-8.

5. © 2011 John Wiley and Sons, Inc. All Rights Reserved THE CHANNEL OF DISTRIBUTION

6. © 2011 John Wiley and Sons, Inc. All Rights Reserved PRIMARY SOURCES Food Growers Manufacturers Processors Beer, Wine, Distilled Spirits Brewers Winemakers Distillers Furniture, Fixtures, and Equipment (FFE) The manufacturer

7. © 2011 John Wiley and Sons, Inc. All Rights Reserved FOOD INTERMEDIARIES Distributor Specialty distributor Full-line distributor Broad-line distributor Brokers Manufacturer’s Representatives Manufacturer’s Agents

8. © 2011 John Wiley and Sons, Inc. All Rights Reserved FOOD INTERMEDIARIES (CONT.) Commissaries Wholesale clubs Cash-and-carry Buying clubs or price clubs Co-op

9. © 2011 John Wiley and Sons, Inc. All Rights Reserved BEVERAGE ALCOHOL INTERMEDIARIES Importer-wholesalers Distributors Alcohol Beverage Commission (ABC)

10. © 2011 John Wiley and Sons, Inc. All Rights Reserved FFE INTERMEDIARIES Dealers Brokers Designers Architects Construction contractors Distributors Leasing companies

11. © 2011 John Wiley and Sons, Inc. All Rights Reserved SERVICES SOURCES Few large national sources exist Most are local Franchisees of a national firm

12. © 2011 John Wiley and Sons, Inc. All Rights Reserved ECONOMIC VALUES ADDED TO PRODUCTS Time Value Form Value Place Value Information Value Supplier Services Value