INNOVATION IN DISTRIBUTION CHANNEL(S) & COST EFFICIENCY ON SMALL & MEDIUM ENTERPRISE SCALES’ PERFORMANCE: Distribution channel innovation

Lee asserted by implementing innovation in distribution channel, the coordination capabilities among channel activities can be enhanced. Lee also confirmed by the innovations, the malfunction of negative consequences could be omitted. By innovations, higher inventory and transportation costs could be reduced. By innovations, longer delivery times will be fastened. And other malfunctions can be omitted by innovations as well. Nada assured further that, using technology, as part of innovation, will enable firm to promote organisational coordination improvement. At last, better performance achieved.
Says assortment is “a collection of two or more types of goods, which either complement each other directly or in total possess some degree of potency for future contingencies”. It was inferred that giving advantage for typical market is the aim of assortment. Diehl & Poynor found customers tend to be less fulfilled when choosing options from larger to smaller assortments. Salvador, worded using product configuration technology to customise product into diverse assortments as customers’ preference will productively enhance sales for the efficient way of serving products to the customers. As optimal assortment activities relied on the right demand characteristic for each product, forecasting demand activities for new products in assortment can bring decision making then lead to the efficiency. It has indication that doing innovation in assortment would improve efficiency, hence, the first hypotheses emerge H1 : Innovation in assortment will be positively associated with distribution performance in terms of efficiency.
Most firms know order handling as one of the crucial factors for business processes. Most firms more know order handling become the main logistic activity that can speed up product and service flow. Most previous studies also know that innovation in order handling would furnish on distribution efficiency performance. Furthermore, most firms closely know the technological support application, such as radio-frequency identification and global positioning system can improved real-time tracking information for products and replacement along the chain as well. They believe, re-engineering or the application of simulation in order processing added more value along the distribution chain, which can improve distribution performance. They more believe the use of enterprise resource planning solution which commonly called “ERPS” in order processing is capable of improving operational efficiency in order delivery. As most of the firms know innovation in order handling will effect efficiency, therefore, the next hypotheses will be H2 : Innovation in order handling will be positively associated with distribution performance in terms of efficiency.
It has been in a debate at length, an effective and efficient information sharing is essential for distribution channel performance. Lee et al, mentioned channel members’ cordination- suppliers, manufacturers, distributors and retailers, would be the key for struggling flexibility that enables them to progress logistic efficiency processes in response to the quick changing market conditions. Fern’andez, indicated that using information technology in information processing, transfer and collection might improve market knowledge & their relationship with clients & suppliers or other channel members. Heide suggested as the success factors for export-oriented SMEs relied upon firms’ ability to manage their relationship with foreign importer, Fern’andez, add the use of information technology (internet) in distribution channel apparently was found to facilitate the internationalization process of SMEs & to improve the relationship with other firms within the same value chain. Similar with other innovation addressed earlier that the information system sharing will probably positively influence efficiency performance, therefore, the hypotheses as follows, H3: Innovation in information system sharing will be positively associated with distribution performance in terms of efficiency.