Distribution management is the process of ensuring that finished items from a manufacturer or supplier reach the ultimate user. During this procedure, numerous activities and procedures are carried out, including storage, inventory management, warehouse selection and packing, and last-mile delivery.
Distribution management that is effective may assist to improve the order fulfillment process, inventory turnover rate, profit margins, supply chain agility, and ultimately client satisfaction.
1. As quickly as possible, complete the order
When you begin, in-house fulfillment may be feasible because there are fewer units to ship. Many companies expand into a multi-channel distribution operation, which leads to greater volume of orders when done correctly.
The elements that have the greatest impact on the fulfillment process are technology and location(s). For example, computer vision technologies can be used to enhance the fulfillment process by assisting warehouse pickers find items quickly within the warehouse.
It’s critical to have the correct technological foundation in place in order to increase inventory visibility throughout your distribution network, allowing you to better anticipate and make more profitable business judgments.
The option of distributing inventory across various fulfillment centers that are closer to your end consumers is also important. For example, you may distribute stock across several fulfillment centers located close to your end customers and rely less on a single warehouse to fulfill orders. As a result, you can optimize shipping by lowering costs and expediting transit times.
The demand for more efficient distribution and transportation methods has increased considerably in recent years, most notably with the strain on resources from growing global population. Furthermore, if a product is out of stock at one place, it may be delivered from another. Finally, supply chain technology and optimized distribution work together to allow quicker retail fulfillment.
2. Customers are continually met with high standards
Customer service requires a sophisticated distribution management system.
You won’t ever have to drop the ball again on getting products from the manufacturer to the end customer thanks to distribution management systems. The technology may be used to guarantee that orders are delivered on a regular basis at the best pricing.
It also ensures that each sales channel has a sufficient amount of SKUs available when the consumer requires it, as well as maintaining order fulfillment efficiency to allow the merchant to pass the savings on to their consumers.
3. Deal with the inevitable variation in demand across seasons
Seasonality can have a significant impact on distribution depending on the items you offer. A seasonal brand, on the other hand, sells items that are relevant at a certain period of time, event, or season and thus has varying levels of demand dependent on the season (such as a swimsuit maker who shines in the spring and summer but not so much in the winter).
Seasonality may influence how vulnerable brands are to sales fluctuations, particularly during the holiday season. Some companies are more susceptible to seasonality than others. Distribution management can benefit seasonal brands by gathering previous sales information and determining how much inventory to keep on hand at specific times, as demonstrated by demand forecasting.
You may adjust inventory levels and distribute them appropriately by predicting market changes, such as seasonal sales order volume fluctuations.
4. Examine data on distribution management
To increase and optimize your distribution network, you’ll need the appropriate systems in place to collect and analyze supply chain data.
You can get insights into how to best distribute product and optimize inventory throughout your network by optimizing everything from inventory turnover rate, warehouse allocation, and the amount of stock on the SKU level presently available at each location.
5. Increase profit margins
Having insight into operations (so you may optimize your distribution approach) can save a lot of money. By simply expanding your inventory storage options from three to five (most likely, via a 3PL).
For example, optimized inventory distribution has been shown to benefit internet retailers:
- Reduce shipping costs by 25%.
- Bring 13% cost savings to your bottom line.
6. Faster delivery options
Customers will choose a brand rather than a competitor if they give more delivery choices, according to 70% of US consumers.
With a well-planned distribution technique, you can provide better shipping benefits to your clients.
To reduce shipping costs and improve transit times, store goods closer to your clients. As a result, you may provide consumers with incentives such as 2-day shipping or free delivery if they spend a certain amount in a single transaction.