Incheon Electric: Business Expansion and Distribution Strategy Report

This report is a business expansion analysis for Incheon Electric, a South Korean power tool manufacturer, focusing on entering the UK market as a stepping stone to broader European expansion. The report, from the perspective of a logistics consultant, examines distribution strategies based on supply chain management principles. It explores direct shipment and intermediate inventory storage strategies, including traditional warehousing, centralized pooling, transshipment, and cross-docking. The report also identifies the role of logistics consultants in optimizing supply chains, reducing costs, and improving customer service. The report suggests potential resellers in the UK to facilitate market entry and details the company's target markets and overall expansion strategy. The report emphasizes the importance of integrating supply chain management into core business processes and provides a theoretical overview of supply chain management, including key concepts like centroids and various theories underpinning its practice. The goal is to provide Incheon Electric with actionable insights for establishing an effective distribution network and successfully entering the European market.

Running head: INCHEON ELECTRIC
Incheon Electric
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Executive Summary
The following report is a business expansion report of Incheon Electric for expanding its
business into European countries. The report focuses on the distribution aspects for business
expansion and understands the responsibility from the view of a logistic consultant. The
strategies for setting up distribution network for the company is discussed in this report based on
the theories of supply chain management. Furthermore, in this discussion few resellers
throughout UK is suggested for reaching out to the customers in UK.
Table of Content

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s
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Overview of the company............................................................................................................3
Role of the logistic consultant.....................................................................................................4
Theories on Supply chain management.......................................................................................5
Integration of Supply chain management into business- processes.............................................6
Distribution Strategies in Supply Chain Management for Incheon Electric...............................7
Resellers for power tools in United Kingdom.............................................................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................12

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Introduction
Distribution in Supply chain management or simply Distribution management is the
process of managing the movement of the good from the manufacturer or supplier to the end
consumers or the point of sale. Under the domain of Distribution management a lot of other
processes like inventory, packaging, supply chain, logistics and warehousing is take care of
(Fernie and Sparks 2018). For wholesalers and distributors, distribution management is an
essential aspect of the business cycle. The following report is business expansion report of
Incheon electric into Europe. The company is a manufacturer of Power tools for industrial and
DIY applications based in South Korea. The company wishes to expand its business by entering
into Europe. The first target region is UK eventually rolling out to other regions like Sweden,
Netherlands or Denmark. The report details on the distribution aspect of the business into UK.
The role of the logistic consultant is identified and strategies for effectively setting up a
distribution network in UK is detailed in this report. The strategies identified or suggested in this
report is based on the theories of Supply chain management and are analyse exclusively for
applying it to the selected organisation to fulfil the purpose. Toward the end of this report, few
valued and trusted resellers are suggested for the purpose of providing goods to the consumers
based in UK.
Discussion
Overview of the company
The company under consideration for the case study is Incheon Electric. Incheon electric
is a manufacture for power tools based in South Korea. The company deals in products like
electric drills, angle grinders, sanding machine and other power tools or equipments. The
company was established in the year 2016 after separating from one of the leading conglomerate

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corporations of South Korea. Tradesman such as plumbers, electricians or carpenters uses the
products manufactured by Incheon Electric. The company identifies the customer requirements
for high quality, durable products and serve them with the best in class tools. The company also
identifies the need or demand of customers for easy availability of products and after sales
services of the products as important factor for serving the consumers. Incheon electric also
offers tools for the use of discerning do it yourself (DIY) enthusiasts.
Incheon electric have established a successful business and have developed a reputed
brand value in most of the Asian markets. The company now looks forward to expand the
business in Europe and sees it as a potential market for expansion. The firm targets the major
countries as Eire, United Kingdom, Germany, Netherlands, Sweden and Denmark as their main
and priority markets to enter. Incheon electric strategy for getting into Europe is by establishing
business in United Kingdom first and then focus on the other countries targeted, incrementally.
Role of the logistic consultant
The logistic consultant helps the organisation in improving its customer service operation
and for developing cost effective techniques for the supply chain management including the
material handling, warehouse and distribution issues. The responsibility of the logistic consultant
is to analyse the information related to the supply chain management (Saglietto 2013). It is the
duty of the logistic consultant to identify and then solve any problem related to the supply chain
and logistics operations for the clients. By aligning to strategic planning, there is an advancement
of information technology and the re-engineering processes. The logistics are claimed to improve
the supply chain functions of the company and enhance its performance and effectiveness.
Advice on management of material, productivity, packaging, transportation of goods, procedures
for manufacturing, order processing and quality control are delivered by the logistic consultant

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(Saglietto 2013). The work environment of the logistic consultant include warehouses. Physical
distribution units and material handling industries. Here the consultant expertise in securing the
client right from the scratch that is the early stages of production through the final levels of
distribution of products to the consumers. Logistics consultants’ helps in manufacturing
industries increase their productivity, cut down excess and redundant costs, upgrade technology
systems, and ultimately provide better service to the customer (Learn.org. 2019).
Theories on Supply chain management.
As understood in the domain off commerce the managing the flow of services and goods
including their movement, storing and processing is known as supply chain management. The
goods may be work in process inventory, raw materials and final products or goods right from
the origin to the final point of consumption.
At present, the theoretical support to explain the boundaries or existence of supply chain
management is not defined. The concept of supply chain management is very agile to be applied
to almost all functions of the business involving the motion of goods. However few authors such
as Halldorsson, Kotzab and Skøtt-Larsen (2003), Lavassani, Movahedi and Kumar(2008) and
Ketchen Jr and Hult (2007) have tried to give theoretical foundations for various areas which are
related to supply chain and its management. The theories are suggested by relying on different
organisational theories such as the concept of resource-based view, knowledge based view,
transaction cost analysis, Agency theory, strategic choice theory. Available to promise, dynamic
management theory, dynamic capabilities theory, requirements chain management, customer
relationship management, quick response manufacturing, time based competition, agile
manufacturing, total quality management, theories of constraints, material requirement planning.

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Theory of just in time, material logistic management, network perspective, system theory,
institutional theory, channel coordination and supply chain roadmap (Saenz et al. 2015).
The concept of centroids have evolved as an important element of consideration for
economics in the study of supply chain management. Centroid is the place or the location,which
is having the highest proportion of population of a country (Caniato Golini and Kalchschmidt
2013). The high proportion is regarded for its manufacturing. It is usually within 500 miles.
Integration of Supply chain management into business- processes.
Integrating activities into major supply chain processes over managing it as individual
functions is required to implement Supply chain management successfully. For an example it can
be understood by the following scenario, order is placed by the purchasing department as soon it
is brought into the knowledge. Communication is made with various retailers and distributors
responding to the demands of the order that is being placed by customers, by the marketing
department. The marketing department attempt to identify ways fulfil the demands. Through the
process integration the shared information among the partners in SCM can be fully leveraged.
Business process integration of supply chain management calls in for a c ollaborative and
harmonious work between the suppliers and the buyers, joint development of products, common
system and information shared. A smooth flow and continuous flow of information is required
for operating and integrating supply chain (Lambert and Cooper 2000). In many companies it is
concluded by the management that the without implementing a process approach optimization of
product flow cannot be achieved. Some of the key processes of Supply Chain Management are
identified as (Lambert 2008) Customer service management, Customer relationship
management, returns management, product development and commercialization, supplier

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relationship management, manufacturing flow management, order fulfilment and demand
management style.
Distribution Strategies in Supply Chain Management for Incheon Electric
The distribution strategy focuses on the distribution functions within the Supply chain
management. There are multiple strategies for distribution identified as per the requirements of
the industry. These strategies bring their own challenges and opportunities in implementation
with them. Fundamentally two of the following distribution strategies are identified.
 Shipping of goods directly from manufacturer or the supplier to the end consumers or the
retail store.
 Incorporating intermediate inventory storage points, which typically are distribution
centres and/or warehouses.
The above stated distribution strategies are illustrated in detail herewith.
Direct Shipment Distribution Strategies
The advantages of implying to this approach is the retailers can exempt the costs of
managing a distribution centre, which is a ballast in terms of monetary value. Furthermore, to
this the lead time is greatly reduced and is a very big advantage (Cóccola et al. 2013).
However, the shortcomings to the approach is it negates the effects of risk pooling and
the cost for transportation between the distributor and the manufacturer increases. This type of
approach is effectively applied to grocery industries or retail store to name a few.
Intermediate Inventory Storage Point Strategies

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Under this approach an abundance of characteristics, determine the strategies like the
time duration for which the product is hold at the warehouse or the distribution system. Thus
there is need to understand the strategies individually and exclusively. The strategies can be
classified as
 Traditional warehousing strategy
 Centralized pooling and transshipment strategies
 Strategy for cross docking
Traditional warehousing strategy
In this approach, the stock inventory is being hold by warehouses and distribution centers
to provide their consumers downstream of the inventory they need (Daniela and Ovidiu 2014).
The management to take care of this approach is either centralized or decentralized. In the
decentralized system, the most effective strategy of each facility is identified not emphasizing on
the impact on other facilities I n the supply chain. Whereas in the centralized system the
objective is to minimize the total cost of the system. The decisions are made centrally addressing
the entire supply chain network. Thus, global optimization is followed by centralized control
lead.
Centralized pooling and transshipment strategies
Pooling approach is ideal when large varieties of products are taken into consideration. It
facilitates push-pull supply chain. Transshipment is the shipment of goods among different
facilities lying at the same level on the supply chain management. This mostly is applied at retail
level. This approach can facilitate with ease reasonable shipping costs, advance information
system and same owners to retailers (Wang and Yue 2015).

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Strategy for cross docking
The concept of cross docking was first popularized by Wal-Mart (Grangier et al. 2017). It
the strategic approach in which the warehouse functions as inventory coordination points and not
as inventory storage points. This allows the goods to spend very little time at the warehouse and
are transferred retailers rapidly or are transferred into vehicles serving for the retailers.
Resellers for power tools in United Kingdom
For spreading out business in United Kingdom Incheon electric relies on trusted resellers
to reach out to the consumers. Resellers are companies or individual making a purchase for
goods or services with the purpose of selling it again and not consuming or using it. The products
are made available to the consumers at an elevated price, which compensate for the profit
margins of the reseller (Storey and Kocabasoglu-Hillmer 2013).
It is essential to collaborate with some valued resellers for getting into a new market,
because even thought if the consumers are not well aware of the product; it will come to their
knowledge via the resellers. Resellers are acquainted with the market conditions and consumer
behaviour of the region and have built an image among the consumers of that region over time.
The fact makes it a good strategy for a business to enter a new market. Incheon Electric wishes
to expand its functioning in the United Kingdom, for this few of the trusted resellers for power
tool within UK are suggested below.
THS Tools UK- THS Tools Group is a reseller for power tools in United Kingdom. Ken Yarker
founded the group back in 1975. The group deals independently in stocking and selling power
tools. At present THS tools have a distribution network comprising of 39 members and 50

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suppliers. The stats shared by the organization claims to show a 75% hike in the turnover of the
company since 1979.
Garrison Dales - Professional Tool Importers & Distributers- the Garrison Dales was formed
back in 1980. The group is a distributor for high quality electric and power tool for industrial
applications. The company supplies over 2000 merchants spread within the UK. The company
have built a good value by providing the consumers with quality products (Garrisondales.co.uk.
2019).
Toucan Tools- Toucan Tools was formed back in 1980. The goal of the reseller is to provide
customers with high-grade power tools for industrial and DIY applications. The company have
built good relationship with the industry leaders for over 39 years. The resell have a large
showroom based out in London East (Toucantools.co.uk. 2019).
CMT Group- CMT Group is a manufacturer and distributor of groundwork tools diamond
blades, safety clothing, PPE and site equipment. Site welfare products and janitorial products as
well as Rail and Traffic Management Equipment (Cmt.co.uk. 2019).
North West tools- Located at Wigan, the company was formed back in 1963 and is trading in
power tools since then. The company is one of the largest independently functioning wholesaler
of electric and Power tool and accessories in the UK. The company deals in a vast range of
stocks and have an experience of over 25 years in the business (About North West tools 2019).
Conclusion
The report is an in-depth analysis for the expansion of Incheon Electric to the UK and
other European countries. This report focuses on the supply chain and distribution factors for
setting business into UK. The report identifies the roles and responsibilities of the logistic

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consultant in supply chain as analysing on management of material, productivity, packaging,
transportation of goods, procedures for manufacturing, order processing and quality control right
from the beginning of the process to the end satisfying the consumers need. The report identifies
the theory of supply chain management useful for the expansion of business to UK as
requirements chain management, customer relationship management, quick response
manufacturing, time based competition or agile manufacturing. The distribution strategies for
entering into Europe is identified as Direct Shipment Distribution Strategies, Intermediate
Inventory Storage Point Strategies, Traditional warehousing strategy, Centralized pooling and
transshipment strategies, Strategy for cross docking. For connecting to the consumers, the
company distributes its products through well known and valued resellers across the UK, few of
the resellers suggested for serving the purpose are Garrison Dales - Professional Tool Importers
& Distributers, THS Tools UK, CMT Group, North West tools and Toucan Tools.

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References
About North West tools (2019). North West Tools - Wholesale Supplies & Distribution. [online]
Northwesttools.co.uk. Available at: http://www.northwesttools.co.uk/ [Accessed 6 Aug. 2019].
Caniato, F., Golini, R. and Kalchschmidt, M., 2013. The effect of global supply chain
configuration on the relationship between supply chain improvement programs and
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Cmt.co.uk. (2019). About Us | CMT Group. [online] Available at: https://www.cmt.co.uk/about-
us/ [Accessed 6 Aug. 2019].
Cóccola, M.E., Zamarripa, M., Méndez, C.A. and Espuña, A., 2013. Toward integrated
production and distribution management in multi-echelon supply chains. Computers & Chemical
Engineering, 57, pp.78-94.
Daniela, N.I. and Ovidiu, R., 2014. Why do logistics and transport matter for development. THE
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Fernie, J. and Sparks, L. eds., 2018. Logistics and retail management: emerging issues and new
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http://www.garrisondales.co.uk/about-us [Accessed 6 Aug. 2019].
Grangier, P., Gendreau, M., Lehuédé, F. and Rousseau, L.M., 2017. A matheuristic based on
large neighborhood search for the vehicle routing problem with cross-docking. Computers &
Operations Research, 84, pp.116-126.

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Halldorsson, A., Kotzab, H. and Skøtt-Larsen, T., 2003. Interorganizational theories behind
supply chain management-discussion and applications.
Ketchen Jr, D.J. and Hult, G.T.M., 2007. Bridging organization theory and supply chain
management: The case of best value supply chains. Journal of operations management, 25(2),
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Storey, C. and Kocabasoglu-Hillmer, C., 2013. Making partner relationship management systems
work: The role of partnership governance mechanisms. Industrial Marketing
Management, 42(6), pp.862-871.

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Thstools.co.uk. (2019). History | About | THS Tools . [online] Available at:
https://www.thstools.co.uk/about/history/ [Accessed 6 Aug. 2019].
Toucantools.co.uk. (2019). About Us. [online] Available at:
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