If a manufacturer begins to sell directly to a large buffet-style restaurant rather than through traditional wholesalers, what might result?

The scenario described involves a manufacturer bypassing traditional wholesalers to sell directly to a large buffet-style restaurant. This shift in distribution strategy can lead to vertical channel conflict. Vertical channel conflict occurs within a supply chain when different levels of the same channel (in this case, the manufacturer and wholesalers) have disagreements or conflicts of interest.

By selling directly to the restaurant, the manufacturer may reduce the role of wholesalers, which can lead to tensions, as wholesalers might feel threatened by the manufacturer encroaching on their market. This situation intensifies competition within the distribution channel, prompting disputes regarding pricing, service levels, and customer relationships. The manufacturer and wholesalers may have differing goals; for example, the manufacturer may wish to increase its profits by reducing intermediaries, while wholesalers may want to maintain volume sales through their distribution efforts.

Understanding this concept illustrates how changes in distribution channels can affect relationships and dynamics within the supply chain, highlighting the importance of coordinated strategies among all parties involved to minimize conflict and maximize efficiency.