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130 CHAPTER 5 The Fulfi llment Process

Business Processes in Practice 5.1: Intel’s
Organizational Structure

Intel Corporation has six independent operating groups organizations has two distribution channels, direct and
that manufacture products, each of which operates four reseller. Thus, there are 48 combinations through which
sales organizations: Asia-Pacifi c, the Americas, Europe, Intel sells its products to its customers globally.
and Japan. Intel locates its sales organizations close to
Source: Intel company reports.
their largest clusters of customers. Each of the 24 sales

DISTRIBUTION CHANNEL
A distribution channel (DC) is the means by which a company delivers its
goods and services to its customers. Typical channels are wholesale, retail,
and online (Internet sales). Just as a company can have multiple sales organi-
zations, it can also have multiple DCs. Each channel has its own strategies,
approaches, and constraints for getting the goods and services to the customer.
More specifi cally, each channel has its distinctive responsibilities, pricing sys-
tems, plants from which shipments are made, and other characteristics. For
example, a wholesale channel has the following characteristics (among others):
• It does not include sales taxes in calculating prices (in the United
States).

• It requires a minimum volume of purchase and offers volume
discounts.
• It may designate a specifi c plant or plants from which deliveries are
made.
In addition, reporting can be consolidated at the DC level. That is, statis-
tics can be summarized and aggregated based on distribution channels. A sales
organization must have at least one distribution channel, although it can have
more than one. In addition, a distribution channel can be assigned to multiple
sales organizations.
Because GBI is a manufacturing organization, it historically has sold its
products through the wholesale channel. Its customers are retailers who, in
turn, sell the products to the end-consumers. Recently, however, GBI has begun
to sell directly to end-customers via the Internet. Although anyone can access
the GBI website to purchase a bike, factors such as complex taxes, shipping costs,
and import duties make it very diffi cult for GBI to operate a global Internet
sales channel. Therefore, GBI manages both the wholesale and Internet sales
channels together at the country level, as illustrated in Figure 5-3. This policy
ensures that the sales organization that ships the product to the customer is the
group that is also the most familiar with the tax laws for that region.
Note that, although all four sales organizations identifi ed in Figure 5-3
are involved with wholesale sales, only two are involved with Internet sales.
The Western US sales organization manages Internet sales for the entire
United States, and the Northern German sales organization manages Internet
sales for all of Germany. If GBI were to venture into retail sales at a later
date, it would create a new channel—retail—to manage these sales because
the strategies for retail sales, such as pricing, minimum quantities, and taxes,
will be different from the other two channels.

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