What is distribution management?
Distribution management includes monitoring the flow of completed items from a manufacturer or supplier to the ultimate customer.
There are several stages in the process, each with its own set of activities and procedures. These include warehousing, inventory management, warehouse picking and packing, and last-mile delivery.
Distribution management that is well-executed can assist improve order fulfillment processes, inventory turnover rates, profit margins, supply chain agility, and customer satisfaction.
Advantages of distribution management systems
Let’s take a look at the advantages of adopting a comprehensive distribution management system after you’ve learned how it works and which tasks are involved.
1. Fulfill order as quickly as possible
When you first begin, in-house fulfillment may be manageable because there are a smaller number of orders to fill.
To remain competitive and reach more consumers, many businesses expand into a multichannel distribution strategy, which results in a greater number of orders when done correctly.
Technology and location(s) are two elements that significantly help to speed up the fulfillment process.
Technological advancements might help manufacturers improve the fulfillment process by starting with automatic order processing, and assisting warehouse pickers find goods quickly in the warehouse.
The right technology stack in place can also improve inventory visibility across your distribution network, allowing you to better anticipate and make better commercial judgments.
Another important consideration is location. For example, you may spread inventory across several fulfillment centers that are closer to your end consumers, reducing the reliance on a single warehouse to process orders. As a result, you can save money on shipping by lowering costs and shortening transit periods.
Furthermore, if an item is unavailable in one area, it may be obtained at a different one. Finally, both supply chain technology and optimized distribution collaborate to help businesses fulfill their orders more quickly.
2. Consistently meet customer expectations
Customer service is the most difficult aspect of any business to manage. Distribution management is critical in ensuring that customer demands are met on a regular basis.
Distribution management systems will never let you drop the ball again when it comes to getting products from the manufacturer to the end customer. The technology may be utilized to guarantee that orders are delivered on a regular basis at the best pricing.
It also ensures that each sales channel has adequate SKUs available to fulfill the demand of the buyer at any moment. It also decreases order fulfillment costs, allowing merchants to pass the savings on to their clients.
3. Respond to market seasonality
Seasonality can have a significant impact on distribution, depending on the type of items you sell.
A ‘seasonal’ company produces goods that are relevant to a certain time period, occasion, or season, resulting in varied demand levels based on the season (for example, a swimsuit brand shines during the spring and summer but not as much in the winter).
Seasonality, on the other hand, affects many brands to varying degrees. While sales vary for many businesses, particularly during the holidays season, some companies are more susceptible to seasonality.
Seasonal brands may benefit from better distribution management by gathering past sales data and determining how much inventory to have on hand at specific points in time, as demand forecasting.
You can adjust inventory levels and allocate them appropriately if you forecast market changes, such as seasonal sales order volume fluctuations.
4. Analyze distribution management data
You’ll need the appropriate systems in place to gather and analyze supply chain data in order to improve and optimize your distribution network.
By optimizing everything from inventory turnover rate, warehouse allocation, and how much inventory on the SKU level is currently available at each location, you can gain insights into how to best distribute product and optimize inventory throughout your network.
5. Increase profit margins
Having insight into operations (so you can optimize your distribution plan) can help you save money by limiting operational expenditures. By simply adding extra sites to store inventory.
One example is optimized inventory distribution, which has shown to help internet retailers:
- Reduce shipping costs by 25%.
- Bring 13% cost savings to your bottom line.
6. Faster delivery options
According to BrightTALK, 60% of US consumers will pick a brand rather than a competitor if they give more delivery choices.
You can provide better shipping incentives to your consumers if you have an established distribution plan.
For example, keeping product closer to your clients cuts shipping expenses while increasing transit time. As a result, you may provide incentives like 2-day delivery or free delivery on purchases of at least $25 worth of merchandise.