The Value Drugs distribution chain will involve the following steps:

First, the company will source the chemical and raw material inputs from various suppliers on short-term contractual grounds as needed.  These transactions will be brokered by a middleman who will shop the chemical and raw materials markets as demand conditions dictate to find the best prices for his client, Value Drugs.  As it begins to form more industry relationships and as the company establishes a fairly steady production schedule the supply channels are expected to become more concrete and longer-term.  

Second, it will source it’s packaging and labeling products in the same manner, where short-term needs will be met as demand conditions dictates until a routine operating schedule is in place.  Bottles to contain the cough syrup and stomach-relief products will be ordered directly from the manufacturers as will the cardboard boxes that will house cases of the end products.  

Third, it will use local and regional wholesalers to distribute to retail chains.  In order to keep inventory to a bare minimum, the production schedule for their products will be driven by new orders.  It  will solicit orders through the manufacturers’ representatives and will guarantee that the company can fill and deliver those orders anywhere in the USA in 3 weeks or less.  These manufacturers’ representatives typically add a 2-3% markup on the Value Drugs wholesale product price.  Because of this fact, the financial statements do not reflect any commission for these individuals.