Distributors can directly and indirectly affect the performance of businesses they do commercial activity with as well as those with whom they may not have a relationship with but do operate within the same industry.

Direct influence on business performance can occur when distributors fail to accurately maintain consumer confidence. Reductions in consumer buying will arguably have detrimental affects on supplier orders. If a distributor receives bad publicity, it can impact upon the supply chain and have adverse affects on more primary levels.

Indirect influence from other distributors may affect business performance of non-affiliated operations if those distributors are large enough to have influence on public opinion. This can be both a positive and negative influence.

The distributor is most often the relationship manager in terms of aftercare, trouble-shooting, and dispute resolution. This emphasizes why a distributor needs to service its customers well if it wants to maintain a healthy consumer demand and thereby demand at the prior stages of its own supply chain. Economists call this rippling affect from consumer to the beginning of a supply-chain the ‘bull-whip affect’ because of the incremental changes felt throughout the various levels of a supply-chain with the strongest being felt at the base level.

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Sources:

• http://www.quickmba.com/ops/bullwhip-effect/

• http://3.bp.blogspot.com/_eW5SzPH5YSQ/R8ucMkrDJXI/AAAAAAAAABY/Kf4Mk0E66xY/s400/Bullwhip+Effect.JPG