What is distribution management?
The distribution management function is concerned with ensuring that finished goods from a manufacturer or supplier reach the customer.
Warehouse management, inventory management, warehouse picking and packing, and last-mile delivery are among the tasks and procedures that occur throughout this procedure.
Distribution management may assist in improving the order fulfillment process, inventory turnover rate, profit margins, supply chain agility, and ultimately consumer satisfaction by optimizing distribution.
Distribution management: Why is it important for ecommerce?
The aim of distribution management is to keep products moving through the supply chain. Distribution management effectiveness has an influence on profit margins and a company’s growth rate.
You might have too much deadstock if you’re overpaying on storage. Or, if you’re not replenishing inventory fast enough, it might result in sales cancellations, backorders, and stockouts.
Distribution management is one of the most intelligent methods for ensuring that:
- Inventory is dispersed swiftly to reach consumers as quickly as possible.
- There is adequate stock to meet demand while reducing storage expenses.
- Business owners have enough insight into operations to make changes and informed judgments.
4 distribution management channels
It is essential to keep an eye on the actual distribution of products in the supply chain. Physical distribution is a significant element of supply chain management.
To comprehend distribution logistics, it’s necessary to grasp the many sorts of distribution channels and how product is transferred throughout the supply chain.
Wholesalers supply bulk quantities of materials or finished goods at a low price and may be sold to manufacturers, distributors, or retailers.
Wholesalers are frequently linked to the distribution of raw materials required to construct a finished good. Fabric wholesalers, for example, give materials to clothing manufacturers, who in turn produce completed clothes.
A wholesaler, manufacturer, or supplier can collaborate with a retailer directly. To fulfill their clients, major stores frequently distribute products from various suppliers across numerous sales channels.
For example, Walmart and Target utilize distinct brands to purchase from so that they may be sold online or in their physical stores.
Distributors function as intermediaries between the manufacturer and the wholesaler or retailer. Manufacturers employ distributors (who are familiar with the local market) to sell their items when they wish to expand their area distribution.
Many times, distributors also provide transportation and storage assistance in their area. For example, automobile manufacturers ship the most up-to-date vehicles to dealerships across several countries so that they may be sold locally to the ultimate consumer.
Direct-to-consumer (DTC) companies have revolutionized ecommerce in modern times, delivering items directly to end consumers (often at their homes). Online stores collaborate with manufacturers and suppliers to obtain supplies and store them in an ecommerce warehouse.
When orders are placed online, the goods are collected, packed, and sent straight from the company. Ecommerce fulfillment has eliminated the middleman from distribution by providing faster delivery, cheaper pricing, and better customer service.
Distribution management challenges & disruptions to prepare for
Only if it includes contingency plans to address unanticipated events can supply chain planning and developing be considered a success.
At any time, product and buyer disruptions, as well as economic and environmental difficulties, can have an impact on distribution.
Here’s a quick rundown of the most common distribution management problems, as well as how to better prepare for the unexpected.
Unpredictable weather conditions
Climate change is causing a slew of unpredictable weather occurrences all over the world, from devastating floods to forest fires, flash floods and heavy snowstorms. This can have an impact on your inventory replenishment and delivery schedules.
Another method to avoid inclement weather is to maintain inventory at several sites. This way, if a warehouse or fulfillment center has to close down due to bad weather, things can be sent out from another site.
The COVID-19 pandemic resulted in:
- A sudden scarcity of raw materials, which delayed the work-in-process phase
- An influx in demand, causing stockouts of essential items
- Warehouse closures
- Shipping delays
- Several other issues that caused supply chains to slow down or halt all together
The global pandemic has demonstrated that establishing a robust supply chain should be a top priority for ecommerce enterprises. Visibility and transparency are critical in developing resilience.
The more information you have on day-to-day operations, the more proactive you can be in reacting to disruptions and keeping your supply chain operational.
Diversifying your distribution approach is also critical, especially when it comes to geography. Inventory distribution not only cuts shipping costs and speeds up delivery times, but it can also be a lifesaver in the case that one location must close down for any reason.
Shipment issues or delays
Many major carriers were nearly full during the epidemic, and they struggled to deliver an above-average amount of shipments on time.
It’s possible for shipping difficulties and delays to happen at any time. It can be a good idea to diversify your carrier partners and work with a combination of both major and local carriers in case one goes down. You’ll have more shipping choices if a carrier is experiencing delays, as a result.
Supply chain shortages
Raw material shortages or production delays may wreak havoc on your supply chain. Partnering with numerous suppliers or manufacturing alternatives is the greatest method to counter raw material shortages or delays in production.
The global market is increasingly competitive, and you need to be prepared for the worst-case scenario. Many buyers are diversifying their suppliers in order to ensure that they are not left without content or supply when a primary supplier is unable to fulfill during shortages, shutdowns, or trade barriers.