ABSTRACT
As far back as the turn of the twentieth century, business strategists have been wrestling with the theory and practice of integrating the customer with the distribution channel. Writing in 1915, supply channel pioneer Arch W. Shaw described distribution as composed of two separate yet interconnected functions: demand creation and physical supply. Demand creation consists in the communication of the value to be found in the array of products and services that fulfills the wants and needs of the customer. Regardless of the demand, however, even the best goods and services would possess no value to the customer if they were not available at the desired time, place, and cost. It was distribution’s role to solve this basic problem of creating exchange value by ensuring that the flow of the output of production was matched to the customer’s requirements as efficiently and as quickly as possible. Shaw felt that finding a solution “was the most pressing problem of the business man today” and “in this great task he must enlist the trained minds of the economist and the psychologist. He must introduce the laboratory point of view.”1
