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Logistics and Distribution Network and Its effect on Firm’s

Performance (Appliances Industry of Pakistan)

A Project

Submitted To The Department Of Management Sciences, Virtual University Of Pakistan

In Partial Fulfillment Of The Requirement For The Degree Of Masters In Operation &
Supply Chain

Submitted By
MC150401572
Muhammad Arslan Shah

Department of Management Sciences

Virtual University of Pakistan
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Dedicated to My Parents
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ACKNOWLEDGEMENT

“In the name of ALLAH, the most merciful and beneficent”

It is the guidance from the Almighty ALLAH that shows the man light in the darkness and the
person finds his way in this light. Without this helping light, person is nothing but a helpless
creation. All respect to the Last Prophet, Hazrat Muhammad (Salalahualhe waalihi waslam), who
brought the light of knowledge and truth when the humanity was wandering in the desert of
ignorance May Allah showers his blessing upon him (PBUH).The teaching of the Holy Prophet
Muhammad (PBUH) were also the continuous source of guidance for us, especially his order of
getting knowledge and fulfilling once duty honestly was key motivation force for us.

I would like to extend my appreciation to such a personality Mr. Tassawar Hanif Sahabyal (Head
of Import, Logistics & Warehousing) who teach me and make me able to make this project. I am
heartily thankful to all of my colleagues, especially Miss Nadia Bashir and Mr. Furqan whom
help and encouragement, guidance and support from the initial to the final level enabled me to
develop an understanding of the subject.
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ABSTRACT:

The purpose of the project is to find relation between distribution network and firm performance.
What is the role of distribution network in customer’s satisfaction? Is firm lost sales due to
deficiency in Supply chain system in keeping view appliance industry of Pakistan .

This project contains the brief introduction of appliances industry of Pakistan, its products and
distribution network model in this sector. A questionnaire is routed in Appliances industry to get
feedback. Target population is Supply chain managers and Executives of appliances industry.

After analysis of data results show very strong relation in customer satisfaction and Distribution
network. It also proves the hypothesis of relation between firm performance and Distribution
network. Survey also shows the communication gap between management and end level
executives which effects firm’s performance.
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Table of Contents

(i) ACKNOWLEDGEMENT………….…………………..……………. 3
(ii) Abstract ………………………….…………………..……………….. 4

1. Introduction ………………..………………………………..….….….7

1.1.Objective ……………………………………………... ………………8

1.2.Project Statement ………………..…………………………………… 8
1.3.Rational ……………………………………..………………….. …….8
1.4.Appliance industry of Pakistan ……………………………………..…9
1.5.Major Companies in Appliance Industry…..………………………….11
1.6.Products in Appliances Industry …………..………………………….12
1.6.1. Refrigerators & Freezers…………..…………………13
1.6.2. Air conditioners…………..………………..…………14
1.6.3. Washing Machines…………..………………..…… 14
1.7. Import Barriers and Appliances…..……………….…………………14
1.7.1. CBUs / Trading items……………………………………..14
1.7.2. SKD Units………………………………………………….14
1.7.3. CKD Units………………………………………………….14
1.7.4. Raw Material & Components………………………….....15
1.8.Distribution Network Model …..……………..……………………………15
1.8.1. Trading Companies……………………………………….15
1.8.2. Manufacturing Companies……………………………….15
1.9.Research Objectives…………………………………………………….......17
1.10. Significance of Study……………………………………….…………..17
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2. Literature Review …………………………………………………18

2.1.Firms performance in view of Distribution Network …………....19
2.2.Firm’s performance in view of Logistics ………………..……... 20

3. Data and Methodology………………….……...……………..…... 22

3.1.Research Method …………..…………………..………………. 22

3.1.1. Qualitative Method ……………….……… …….……… 22
3.1.2. Quantitative Method …….……………… …………….. 23
3.1.3. Mixed Method ………………………......................…… 24
3.1.4. Research Method Adopted …...………..………… ….. 24
3.1.5. Data Collection sources………………………………… .. 25
3.1.6. Subject Participant……………………………………… .. 25
3.1.7. Data Processing analysis technique interpretation… ........25
3.1.8. Research Instrument / Tool for the collection of d………..25

4. Data Analysis …………………………………..................………..26

4.1.Demographic Profile of Respondents ………………………….…. 26

4.2.Interpretation ………………………………………….................... 27
4.3.Descriptive Statistics of the Survey Items……………….…..…..… 28
4.4.Interpretation ……………………………….……………..…… ….. 30
4.5.Software used for warehouse Management………………..……….. 31

5. Conclusion …………………………………...………..………….…32

6. References ……………..…………………………………....………33

7. Definition…………………………………………………………….34

8. Appendix……………………………………………………………...35
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1. Introduction:
Distribution network is an important part of supply chain and can be defined as network of
storage facilities, transportation system and interrelated arrangement of people, which aims to
transfer final goods from producers to customers, typically retailers [1] . Distribution
network design concerns with the structure of distribution network: determining the number of
echelons in supply chain and for each echelon number, type, size and location of
facilities, where the finished goods are stores on the way to consumers
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1.1. Objective:
The objectives of this project are to find relation between

 Distribution Network and Customer Satisfaction

 Logistics and Distribution practices in Appliances Industry of Pakistan

 Effect on Firms performance.

1.2. Project Statement:

“Transportation & Distribution Network effect on firms Performance (In Appliance Industry of
Pakistan)”

1.3. Rational:
According to Pakistan Economy Survey 2018-2019, The performance of appliances is
largely dependent on global raw material prices such as steel and copper which makes the sector
vulnerable external dynamics. Despite this the sector growth is on account of electric motor
growth recorded at 142.16%, electric transformers 42.92%, Air conditioner 23.63 and deep
freezers 5.18%. Here we discuss some important points how this study would be helping further
for Practitioners, Policy Makers and Researchers.[2]

Distribution Networks plays vital role in increasing profit of firm at least cost. In 2017, second
largest company in appliances sector PEL has bear double distribution cost than 2016, which
increase the cost of goods sold and also the decrease profit margin.[3]
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1.4. Appliance industry of Pakistan:

Appliances industry in Pakistan is among the mature manufacturing sectors that is providing a
reasonable level of employment, bringing technology and upgrading the manufacturing base of
Pakistan vendor industry. With the passage of time volume increased and import focused shifted
from CBU(1) imports from Europe to China and further to it keep on changing different phases of
industry by setting up various assembling factories.

This is a known factor that present appliances industry is mainly based on Chinese technology
and majority local manufacturers have technical collaboration or joint ventures with Chinese big
companies. It is also worth to mention that Pakistan and China collaboration at government level
provided good playing field to only promote imports while focused was not been on localization.
Several FTAs(2) are available, under invoicing(3) is another issue that has been addressed in
previous years and both governments are taking measures to curb this. FTAs are discouraging
localization initiatives those should be a key factor with present numbers of manufacturing units.

Pakistan is a two hundred million population country standing on no 6th position in the world.
Having great potential of retail market that includes appliances sector. As some appliances are
necessity of each home and with the improvement of life style luxury will also be part of life and
will give an ultimate boost in numbers of sale and hopefully a continuous growth will be
observed. .
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Following are the trends of various appliances in Pakistan

Fig 1

Fig 2
Notes Related to Data
1) Data of production from 2015 to 2017 is taken from reference to actual import data of customs with
some reference components of each product.
2) 2018 to 2022 is assumption based on average growth of industry like 10% in general while in case of
Automatic Washing Machine 40% and Semi-Automatic WM 5%.
3) Appliances considered Refrigerators, Deep Freezers, Air Conditioners, Washing Machines, TV, Micro
Wave Oven and Water Dispenser.
4) Value in dollars also taken assumption of average sales prices in US$ considering exchange rate 105
from 2015-17 and 112 from 2018-22.[4]
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1.5. Major Companies in Appliance Industry:

There are various players in Pakistan those are engaged in manufacturing of different appliances and
using manufacturing capacity and import of CKD/ SKD options based on their available facilities
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1.6. Products in Appliances Industry:

2. Refrigerators & Freezers

3. Air Conditioner

4. Air Coolers

5. Deep Freezers

6. Electric Water Coolers

7. Cleaning Appliances

8. Gas Appliances

9. Geyser Manufacturers

10. Home Appliances Stocks

11. Home Appliances Supplies & Parts

12. Home Heaters

13. Heating Equipment & Systems

14. Home Appliances Agents

15. Home Appliances Dealer

16. Humidifiers

17. Refrigerators & Freezers

18. Vacuum Cleaner Dealers

19. Washing Machines

20. Juicer & Blender

21. Kitchen Appliances

22. Laundry Appliances

23. Water Heaters

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The domestic home appliance engineering industry consists of medium to large size units in
organized sector with enough managerial capacity. Product wise analysis of the industry is as
follow:-

1.6.1. Refrigerators & Freezers:

Refrigerator industry in Pakistan is past its developing stage and the giants of home appliances
possess all the sufficient resources to maintain and improve its growth. However, there are two
shortcomings in this product. Keeping this fact aside, there are still a couple of obstacles which
are hindering the progress of refrigerators made in Pakistan. The compressors are not
manufactured in the country so they have to be imported and this, as a result, increases the cost
of production. On the other hand, the Chinese competition offers cheaper refrigerators in the
market and this difference of price often attracts more customers. The industry of freezer is no
different than this as it is facing the same problems.

1.6.2. Air conditioners:

Pakistan’s Air conditioner industry was established in 1980s through fiscal incentives and high a
high tariff wall to protect local industry. Window Air Conditioners were its only product and
with the advent of split ACs which are much more energy efficient, it suffered a major blow and
the production came to a halt. Around mid 2000s, the industry started again but this time it used
CKD and SKD methods for manufacturing the Air Conditioners. Unless the industry comes up
with some major innovations and undergoes strategic changes in its marketing plan, it can
neither export its product profitably nor compete with the competitive prices.

1.6.3. Washing Machines:

Washing machines industry in Pakistan is divided into two groups:

 Organized Sector
This industry started in the same period as the air conditioner industry in Pakistan. It
withstood the reform made with regards to the supply and worked under high taxes. At present,
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the industry produces around 150,000 units including both single tub washers and semi-
automatic twin tub (125,000) machines but there is no fully automatic products in this area yet.

 Unorganized Sector
The unorganized sector is concentrated in the areas of Lahore and Gujranwala and it is much
larger than the organized sector. There are no official facts and figures of the number of units
produced but one claim suggests it to be around 500,000 to 700,000 units per year with a small
number of exports to the under developed African markets. The strengths and weaknesses of this
sector were indentified for capitalizing on Strengths and overcoming of weaknesses. Strengths
and weaknesses are listed in proceeding paras. [5]

1.7. Import Barriers and Appliances:

There are many too many product of appliances industry. Raw material and components
of these good and are imported, mostly from china. These appliances can be classified on basis
condition on which these is import

1.7.1. CBUs / Trading items:

Complete Built units otherwise known as CBUs fall in the category of products which are
completely assembled as well as tested and do not require any further additions before they can
be made available to the target market. Some examples of common CBUs are given in table

1.7.2. SKD Units:

Semi knocked down units, also called as semi built units are those products which are partially
assembled in some other country (hence the name semi) and then imported from that country,
assembled to its completion and then sold in the importer’s market. Table 1 shows some
important SKD units.

1.7.3. CKD Units:

This category includes ‘completely knocked down’ products which are imported from foreign
suppliers and then assembled together to form the final product to be sold in the target country.
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As the final product requires complete assembly before it can be dispatched to the end consumer,
an assembly plant is required to accomplish the task which is turn creates employment
opportunities in the target country. A brief list of CKD units is given Table 1.

1.7.4. Raw Material & Components:

Those products which are completely or partially manufactured in the host country but the raw
material and essential components which are required in different stages of its production are
imported from another country fall into this category. Some examples of such products are given
in Table 1.

Import Type Product Tax Liability

CBU Washing Machine, Iron, Toaster High

SKD Water Dispenser, LCDs Moderate
CKD Air conditioner, Moderate
Raw Materials Refrigerator, Deep Freezer Low
Table 1

1.8. Distribution Network Model:

In appliance sector, there are two types of companies

1.8.1. Trading Companies:

These companies import complete manufactured unit and sell them in market. Sometime
shopkeepers directly import mostly from china and sell product to direct customers. These
companies have no distribution network.

1.8.2. Manufacturing companies:

These are organizations with vision and polices, they have all necessary departments and follow
the procedures.
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1. Sale/Marketing Department shares the monthly and annual sales plan

2. Production Department assembles and manufactures the goods according to production

plan which is based on sales plan.

3. Finish Good stored at Factory Warehouses and dispatched to area warehouses in all
across Pakistan as per area sales plan (forecast).

4. Sometime directly good dispatched to dealer/Customer to save freight, inventory carrying

cost and holding cost.
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1.9. Research Objectives

The objective of study is follow

 To find relation between firm performance and distribution network

 Effect of logistics and warehousing on customer satisfaction

 Effectiveness of supply chain in appliance sector of Pakistan

1.10. Significance of the study

This study expects to find the importance of Distribution Network in any organization. How
effective practices used in supply chain sector of Pakistan especially in appliance industry.
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Chapter # 02
2. Literature Review

2.1. Firm’s Performance in view of Distribution Network

Distribution network acts as a vital organ in the supply chain of any enterprise. The
operations of a firm start by analyzing the market and identifying the needs of target
customers. Afterwards, the firm lays out its objectives and portfolio which contains a list
of products or services it will provide to its customers in order to create value and obtain
profit. At this stage the firm has to come up with a distribution strategy and form a strong
and capable distribution network.( P. Serdaris,)
Domschke and Schield thus emphasis: “Distribution encompasses a system of all
activities that are related to the transfer of economic goods between manufacturers and
consumers. It includes such a coordinated preparation of manufactured goods according
to their type and volume, space and time, so that supply deadlines can be met (order
fulfillment) or estimated demand can be efficiently satisfied (when producing for an
anonymous market)”(Domschke & Schield, 1994).[7]
The term “distribution channels” can at the moment be replaced by the term “marketing
channel”. “Marketing channel” as a more complex term has been used in the USA since
the 1970s, because the intermediaries include not only those who participate in the
physical flow of a product from the manufacturer to the end user, but also those that have
a role in the transfer of product ownership, as well as other intermediary institutions that
participate in the value distribution from production to consumption (Tipurić, 1993, 15-
16[8] Therefore, it is assumed that there are three types of marketing channels (Kotler &
Keller, 2008, 26[9]: communication channels, distribution channels and service channels.
788 Distribution or marketing channels are systems of mutually dependent organisations
included in the process of making goods or services available for use or consumption. 1
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Moreover, a marketing channel is "the external contractual organization that management

operates to achieve its distribution objectives“ 2 (Rosenbloom, 2004, 8)[10]. There
follow some more recent concepts of the distribution channel: „Channel of distribution –
The route along which goods and services travel from producer/manufacturer through
marketing intermediaries (such as wholesalers, distributors, and retailers) to the final
user. Channels of distribution provide downstream value by bringing finished products to
end users. This flow may involve the physical movement of the product or simply the
transfer of title to it. Also known as a distribution channel, a distribution chain, a
distribution pipeline, a supply chain, a marketing channel, a market channel, and a trade
channel.“ (Ostrow, 2009, 59[11]. Similarly, distribution channel is defined by Hill:
"Distribution channel - one or more companies or individuals who participate in the flow
of goods and services from the manufacturer to the final user or consumer" (Hill, 2010,
93)[ Hill, A. V. (2010): The Encyclopedia of Operations Management - 2010 Edition : A field
manual and encyclopedic glossary of operations management terms and concepts, Clamshell
Beach Press.]. Nevertheless, other types of flows should not be neglected in distribution
channels, so that the following definition is also possible: "Channel of distribution consist
of one or more companies or individuals who participate in the flow of goods, services,
information, and finances from the producer to the final user or consumer.” (Coyle,
Bardi, & Langley, 2003, 106)[ Coyle, J. C., Bardi, E. J., & Langley, C. J. (2003): The
Management of Business Logistics : A Supply Chain Perspective, South-Western, Thomson
Learning]

It is to be noted that there are several additional factors affecting the operation of the
distribution network which is mainly the transportation of goods from their point of
origin to their destination. The firm has to make decisions about its distribution network
according to the type of customer it is dealing with i.e. whether there is going to be a
direct or local delivery of products or services to the customer (POM pg 227). Similarly,
the size of the firm also has a large impact on the distribution network. For example,
market giants of home appliances handle a lot of imports with the help of a number of
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different distribution and logistics companies who may or may not be owned by the firm
itself. Sometimes the firm has to reach out to other agencies to fulfill its distribution
needs by carefully analyzing the costs and benefits offered by each and every one of them
in order to capture the most out of a given market.
Special arrangements are needed to maintain the consistency of the products and or
services offered by the firm to all of its customers whether they are local or international
(POM pg 236). This is can be done by keeping a close eye on the distribution channels
and competing firms. Failure to do so will result in an inconsistent quality on part of the
firm and it can lose the potential value it can attain from its customers. Moreover, if a
new product is coming to the market or the firm makes any changes in its existing
portfolio, whether it is as small as a change in color of a product or as large as complete
rebranding of the product, there must be a quick distribution strategy made beforehand to
make sure that the new and changed product is available to the customer as soon as that
change happens. This is a rather simultaneous process and it says a lot about the control
of a firm on its distribution network.
Distribution is defined as the transportation of the product from the point of production or
transshipment to the point or points where demand has been recorded, in order to satisfy
the expectations of the production enterprise and the consumer (Binioris, 2008). The
physical distribution is part of the supply chain, and its purpose is to deliver
goods/services to the consumers. More specifically to the demand points of the finished
product in the right place and time, in the right quantity and at the lowest possible total
cost (Blanchard, 2010).

2.2. Firm’s Performance in view of Logistics

Transportation is the shifting of a load from a production site to where demand occurs
(Binioris, 2008)[12]. Over the last 30 years, we have witnessed that a system of direct
transportation of goods from the production site to the place of use or consumption, we
gradually lean towards a system with intermediary concentration stopovers and
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simultaneous decentralization of the distribution of loads. The stations that nowadays,

usually, take the form of commodity centers, are called hubs and the whole formation of
transfer policy that they follow is called hub and spoke and mainly air-carrier and air-
transport companies implement this policy. The supply of transport services of a modern
supply chain should be directed to implement the following five objectives, which are the
main features and characteristics of the philosophy of logistics management (Armstrong
and Kotler, 2009):[ a) Quality: planning, development, implementation and choosing
transport services that transfer products and materials without defects and damages. b)
Speed: the delivery and the time of handing the material or final product are sources of
competitive advantage for our company. Consequently, the transportation speed assures
quick introduction and smooth supply of products into new markets, stock reduction and
an increase in the customer service level. c) Reducing Cost: Transportation cost is a
major component of the total cost of logistics management of an enterprise (Ballou,
2004[13]. Consequently, the possible reduction in transport costs helps reduce total cost
of operation of logistics. Consequently, the highest possible reduction of the
transportation cost, contributes to the reduction of the total cost of the operation of
logistics.
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Chapter # 03
3. Research Method
Originally, it is essential for an investigator to adopt whatever kind of study is to be
accompanied: affirmative or investigative study. Hair et al. (1995), suggests that
favorable studies are individuals looking for to examine a pre-specified correlation,
whereas investigative studies are individuals which state potential associations in solitary
the greatest over-all procedure and then permit multiple procedures to appraise an
association. In the final circumstance, the scholar is not observing to "authorize" any
relations stated proceeding to the study but in its place permits the technique and the
statistics to describe the landscape of the relations. Present are three sorts of investigation
methods; Quantitative Research, Qualitative Research and Mix Method Research.

3.1. Qualitative Method

Qualitative data includes words, opinions, thoughts, feelings and behaviors. The
advantage is that you get lots of detail about specific cases, people or group. The
disadvantages are that you can’t make general statements, and that analysis is time
consuming. Some would argue that the analysis is also very subjective, but this depends
on your approach. When reading a piece of qualitative research, look for the level of
detail and clarity in the methodology and particularly how they analyzed the data. For
example, you will often see thematic analyses referred to, but the author should give
details about how the themes were identified and on what basis where certain themes kept
and others ignored. Also, be alert to what generalizations are made on the basis of very
small samples or case studies. A good qualitative research article will have a solid basis
in previous research and will compare their results to other studies. It will also include
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lots of rich detail, usually in the form of quotes or examples, to illustrate their
interpretations. So read the results sections carefully, and see whether or not you agree
with how they have analyzed the data.

3.2. Quantitative Method

Quantitative data is numbers and statistics. The advantage here is that you can
collect and analyze much more information. With good design, that means you can make
general statements about what is likely to be true overall. A drawback can be a lack of
depth (e.g. reasons why, context, emotions or feelings). Also, it requires mathematical
and statistical knowledge to be able to analyze the data effectively. Descriptive statistics
(bar graphs, pie charts, etc.) are useful to present the data and inform the reader, but are
not usually adequate analytical methods. These only describe your sample. Inferential
statistics are used to explain or demonstrate hypotheses in the overall population. Your
research design needs to consider what statistical analyses will be performed from the
beginning. You need to know at the outset what type of data you will be collecting. For
example, if you are collecting data on sickness at work, you could collect this as a
‘yes/no’ type question (e.g. have you been off sick in the last month) or as a scale (e.g.
how many days have you been off sick). So the data that you need affects the questions
that you ask.
When reading articles which use quantitative data, examine the methodology
section to see how they have identified their population and sample. Also examine this
section to see whether or not their approach supports their conclusion. For example,
studies may identify a similarity between two variables (e.g. ice cream sales and murders
committed) and conclude that there is a link (although it may be coincidental) or it could
be due to a third variable (e.g. heat - murders go up in summer and so do ice cream sales).
So always look for alternative explanations for the link or explanation the author is
proposing.
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3.3. Mixed Methods

Mixed methods mean that you collect both quantitative and qualitative data and
analyze both together to answer your question. For instance, say you wanted to know
whether parents’ feelings about reading with their children affected children’s reading
scores. You could interview parents, sort them into groups (e.g. confident, mixed
feelings, and anxious) and compare the test scores of children whose parents fall into
different groups. That would be a good mixed methods design, because you are using the
qualitative data to inform the analysis of the quantitative data (known as multi-stage
research design).
Alternatively you can ‘triangulate’, or collect different types of data to check your
findings or illustrate your interpretations. For instance, you could compare the reading
test scores of children, and also interview them and their parents to find out how they feel
about reading. This would let you ask parents directly about how they think their
confidence affects their children’s reading, and see whether this matches your statistical
analysis. However, not all topics require mixed methods, and it is not always better to use
mixed methods. For instance, say you want to know whether a company’s profits are
affected by employee absences or not. Since you can count both variables, there is no
need for additional qualitative data. Similarly, say you want to know how introverts think
of themselves. Would you learn anything relevant by counting the frequency of introverts
in a particular social group? Probably not. Occasionally, you will read journal articles
which use two different sets of data that never really relate together. If this happens, you
can point out in a literature review or critical evaluation that it was perhaps a weak use of
a mixed methods design.

3.4. Research Method Adopted

The mix method is used for research, both qualitative and quantitative method are used to
collected, all of questions are on likert scale except one question which is added to get
feedback about logistic mode and reason
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3.5. Data collection sources

Primary Data is collected through questionnaire which is prepared with help of Google
form and in some cases hard copy of questionnaire routed to appliance industry of
Pakistan.
Source of secondary data is internet, Annual reports and figures provided by supply chain
specialist.
3.6. Subject participant
Survey is done in manufacturing companies in appliance industry of Pakistan
And participants are warehouse in charge, store officer, sales dept and supply chain
manager. Target population of survey is executives and manager only so no. of
participants are low and there is very small no. of firm in industry so no. of participant is
low.
3.7. Data processing analysis technique interpretation
3.7.1. Research Instrument / Tool for the collection of data

Research Instrument is one of the most important part of the study as it is essential
to collect the data can provide useful insight into the research topic and then further helps
in analyzing the data for making out conclusions out of that. Questionnaire would be the
research instrument that is used in the existing study. The research instrument that is
being used is adapted from various studies. The quantitative data will be collected using
questionnaires. For the proposed study, research would use questionnaires and the reason
is that questionnaires are a research instrument consisting of a series of questions and
other prompts for the purpose of gathering information from respondents. Although they
are often designed for statistical analysis of the responses, but this is not always the case.
The questionnaire was invented by Sir Francis Galton. As the research approach in the
proposed study is quantitative, hence, the data will be collected using questionnaires
through close ended questions with a scale of 1 – 5 as 1 being the highest such as,
strongly agree and 5 being the lowest as strongly disagree.
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Chapter 4

4. Data Analysis
Once the data is being collected then the most important phase is to make conclusion out of that
while analyzing the data that is derived from the data collection methods. Therefore, the analysis
in this study would be done by using Excel Software that is used for analyzing the results and
generating reports

4.1. Demographic Profile of Respondents

About 60 questionnaires were filled from the people belonging from various appliances
companies. This was done in order to gain a better data from the respondents for a meaningful
analysis. The table given below contains information all of the respondents on the basis of
demographic variables of the research.

Table 1

Respondent Demographics Frequency %

Gender

Male 52 87%

Female 8 13%

Age

Under 25 Years 16 27%

25 – 30 Years 23 38%

30 – 35 Years 10 17%

35 – 40 Years 9 15%
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50 Years or Above 2 3%

Qualification

M. Phil or PhD 3 5%

Masters/Bachlor Degree 42 70%

B.A / B. Com (2 Years Program) 14 23%

Intermediate or Other 1 2%

Work Experience

Less than 1 Year 7 12%

1 Year to 3 Years 18 30%

More than 3 Years to 5 Years 8 13%

More than 5 Years to 8 Years 11 18%

More than 8 Years 16 27%

Marital Status

Single 29 48 %

Married 31 52%

4.2. Interpretations:

The above table shows that the majority of the participants are single males who are between 25
to 30 years of age and have up to 3 years of work experience; hence, the major response is
extracted from those age brackets which consist of rather young employees of the organization.
The quality of respondents is also maintained as all of them are qualified enough for giving the
answers related to the research because majority of the respondents have reputed degrees.
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4.3. Descriptive Statistics of the Survey Items

Items N Min. Max. Mean Std. D.

Collaboration of Logistics and Supply Chain 60 1.00 5.00 1.25 0.44
Network with Organization is very important to
achieve these organizational objectives. [Increase
Profitability]
Collaboration of Logistics and Supply Chain 60 1.00 5.00 1.58 0.56
Network with Organization is very important to
achieve these organizational objectives. [Cost
Reduction with firm]
Collaboration of Logistics and Supply Chain 60 1.00 5.00 1.72 0.72
Network with Organization is very important to
achieve these organizational objectives. [Benefit
to Client(Dealer/Shopkeeper)]
Collaboration of Logistics and Supply Chain 60 1.00 5.00 1.67 0.75
Network with Organization is very important to
achieve these organizational objectives.
[Improved Quality Assurance]
Members of all supply chain department within 60 1.00 5.00 2.32 0.75
organization have common, agreed goal. They
have complete necessary knowledge of these
targets/goals.
Effectiveness of Supply Chain in Appliances Sector
Your firm shares Master supply chain plan with 60 1.00 5.00 2.22 0.89
you to meet targets of seasonal/peak demand.
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Firm's warehouse/Distribution channel has ability 60 1.00 5.00 2.25 0.84

to respond to and accommodate demand
variation, like seasonality demand.(All Required
SKUs are available)
Your organization's consumer goods are stored at 60 1.00 5.00 2.48 1.24
appropriate distribution point.(Warehouse is able
to timely deliver Finish goods to
customers/Dealers)
Effective Distribution Network i.e logistics, 60 1.00 5.00 1.48 0.54
warehouse location and warehouse operations
(loading, offloading, stacking, inventory
management) effects on these factor. [Timely
Deliveries]
Effective Distribution Network i.e logistics, 60 1.00 5.00 1.48 0.62
warehouse location and warehouse operations
(loading, offloading, stacking, inventory
management) effects on these factor. [Product
Quality(Packing)]
Distribution Network and Customer Satisfaction
Have you ever lost your customer (Lost of sales, 60 1.00 5.00 2.63 0.66
Goods Return, Customer purchase from
competitor) because of following factor? [Late
Delivery]
Have you ever lost your customer (Lost of sales, 60 1.00 5.00 2.23 0.91
Goods Return, Customer purchase from
competitor) because of following factor. [Non-
availability of Stock]
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Have you ever lost your customer (Lost of sales, 60 1.00 5.00 2.06 0.97
Goods Return, Customer purchase from
competitor)because of following factor.
[Communication Gap Between Marketing/Sales
& Distribution Channel]
What is the level of not sale able goods or Dead 60 1.00 5.00 1.65 0.61
Inventory in your warehouse? (Good have no
demand in this territory , Damage Good, Poor
Packing)

4.4. Interpretations:

The questions asked in the survey were helpful in determining the effect of distribution network
and its role in an organization as well as customer satisfaction. Majority of the participants agree
that the logistics and the supply chain network have to be in complete collaboration with the
organization itself to increase profitability, reducing costs and improving the client benefits and
quality assurance. But the common goals are not often agreed upon or rather known by all the
members of the supply chain. For example, the people handling the warehouse stock do not
strictly know the sales target set by the organization. This is quite evident from the survey as
most of the participants show a neutral status in this category. Similarly, it can be seen from the
table above that the location of the warehouse is directly connected to the effectiveness of the
distribution channel and there have been cases where the firm lost its customer due to late
delivery or non-availability of stock. Hence, it is imperative to have an appropriate location for
keeping a good stock and consistent quality of the product.

The survey showed that majority of the organizations like to utilize outsource logistics for their
outward logistics. This may be because outsourcing offers an easy and inexpensive alternative
than the other two options. It does not required too much capital.
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Hybrid (Both) 1

20%

Owned Logistics 2
58.33%
21.66%

Outsource Logistics 3

Most of the software’s used by the organizations for warehouse management system include
Oracle, Excel and SAP. Some organizations use a combination of these software’s for managing
different stages in their respective warehousing systems.

Softwares used for Warehouse Management

14
12
Number Of Companies

10
8
6
4
2
0
Oracle SAP Customized Manual/Excel WMS
 Page 32 of 38

Chapter 5

5. Conclusion
This study shows the strong relation between distribution network and customer satisfaction
which plays important role in firms progress.

According to feedback from supply chain specialist, most of warehouse in charges/Executives

are not well aware of organizational goals and target. Sales plans are not shared with warehouse
officers; they are just performing daily activity. This show that firm is Pakistan and especially
appliances sector do not give importance to supply chain sector.
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6. References
1- (Ballou, 2001)
2- Pakistan Economic Survey 2017-2018
3- PEL Annual Report 2017
4- Figure 1 and Figure 2 is taken from Presentation by Haier Company to Pakistan Electrical
Manufacturing Association
5- (http://dartways.com/sectors/16)

6- P. Serdaris, I. Antoniadis and N. Tomlekova , Supply Chain Management: A View of the

Distribution Channel P481

7- Domschke, W.; Schild, Brigitt (1994): Standortentscheidungen in Distributionssystemen, in

Issermann, H. (Hrsg.): Logistik, Verlag Moderne Industrie, Landsberg am Lech

8- Tipurić, D.(1993): Interorganizacijski odnosi u kanalima marketinga, Doktorska disertacija,

Ekonomski fakultet u Zagrebu, Zagreb

9- Kotler, Ph.; Keller, K. L.(2008): Marketing Management, 12th Ed., Prentice-Hall, 2006.,
Prijevod, MATE, Zagreb

10- Rosenbloom, B. (2004): Marketing Channels: A Management View, Seventh Edition, South-
Western, Cengage Learning

11- Ostrow, R. (2009): The Fairchild Dictionary of Retailing, Second Edition, New York, Fairchild
Books, Inc

12- Binioris, A., 2008. Logistics: Introduction in supply chain management. Iatrikes Ekdoseis P.X.
Passxalidis, Athens. (Gr).

13- )[ Ballou, R. H., 2004. Bussiness logistics: Supply chain management. 5th edition, Pearson
Prentice Hall, New Jersey.
 Page 34 of 38

7. Definitions:
CBU: complete built unit, Trading Item

This term is mostly used for imports of finish goods, which required no further assembling or
manufacturing process before selling.

FTA: Free Trade Agreement

Under Invoicing: Some companies show less price of raw material and components on
imports to save Govt. Duties and Taxes.
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8. Appendix:
Survey Questionnaire:
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