This study investigates the role played by service quality at manufacturer-distributor junction in small-medium manufacturing units, and presents a model that proposes and validates that contribution towards service quality on behalf of both the distributor and manufacturer leading to satisfaction as well as loyalty. The research design for this study includes a combination of literature review, exploratory interviews and a questionnaire survey conducted through interview schedule from 101 respondents working in different small-medium manufacturing units (SMEs) of North India. The study uses Structural Equation Modeling (SEM) to develop dual directional scales to measure service quality at manufacturer-distributor junction besides testing a set of propositions related to service quality. A model showing linkages of manufacturing organization's service quality with distributor service quality leading to mutual satisfaction and loyalty is developed. The model is empirically tested and is found to be fit. This study would be of interest to SME practitioners interested in improving service quality w.r.t. distributors. This study finds support for strengthening relationships with distributors to achieve a win-win situation. Future researchers may validate this scale, and empirically test the proposed model in similar settings. Insights derived from this study may be transferred to other junctions of a manufacturing supply chain such as suppliers, retailers, employees and end customers.