Is Disintermediation Threatening Distribution Companies?

Hopkins Distribution Company has been providing effective warehousing and distribution solutions to companies nationwide since 1993. Producers of retail goods are looking at disintermediation as one way to cut costs and increase profits. In other words, different parties within the supply chain are looking for ways to cut out middle men. In this article we examine what disintermediation is and how it’s affecting distribution companies.

What Is Disintermediation?

Photo of employee applying shipping label to box“Disintermediation is the removal of intermediaries in economics from a supply chain, or cutting out the middlemen in connection with a transaction or a series of transactions,” (Wikipedia).

The term dates back to the banking industry of the 1960’s. Rather than letting savings accounts live at banks, consumers bypassed banks by investing directly in securities such as government bonds, stocks and the like (Wikipedia).

With the advent of the internet, producers sought ways to connect directly with buyers. Savvy companies such as Amazon realized the huge potential for creating a digital marketplace for this purpose. It’s ironic that Amazon has made a name for itself by cutting out intermediaries in the supply chain while they themselves act as an intermediary.

If Amazon is the digital disintermediation giant, then Walmart is the brick and mortar exemplar of the practice. They are well-known for reducing the intermediaries between suppliers and buyers with the goal of fractionally reducing product prices for buyers.

Is Disintermediation Signaling the End of Warehouse Distribution?

As sellers and buyers can directly connect with greater ease, some are questioning the continued value of warehouse distribution in the supply chain.

Disintermediation might sound attractive on the surface, but it fails to address the value of effective logistics conducted by seasoned professionals.

Vendors of all types continue to struggle with inventory management and order fulfillment, because it’s difficult for vendors to focus on increasing sales when the logistics of maintaining and delivering products remains rigorous. Accuracy is the name of the game here, and it’s no simple task to make sure orders get pulled and delivered on time.

In What Ways Does Hopkins Help Manufacturers?

We process inventory with an accuracy rate of 99.997%. We achieve this difficult standard by using a systematic approach to order fulfillment that includes our custom-designed warehouse management system (WMS) and our elite team of 3PL logistics professionals.

Efficient order placement, inventory management and order fulfillment require real-time data sharing between members of the supply chain in order to maximize efficiency. This data sharing is known in the industry as integration. One of the primary functions of our custom-designed WMS is the integration of client software with our own.

Al Toliver, Chief Logistics Officer of Redwood Logistics, commented on the value of integration when he said, “Integration is the key to an efficient supply chain because it breaks down the walls between software applications. Integration across the supply chain simplifies internal communication and services surrounding inventory management, transportation, warehousing and other supply chain components,” (

Hopkins Distribution Company helps producers and manufacturers of all types effectively store and distribute their products. Our technology can speak with yours and vice versa. This simply isn’t the case with other warehousing and distribution providers. Our clients can check the status of orders being processed at our facility in live time!

If you need to seamlessly coordinate the movement of products between any members of the supply chain, Hopkins can help you out.

Give us a call at 800-655-3644 to discuss your warehouse distribution needs!