What is Distribution Management, and why should you care about it?

We will get into what is distribution management and why it may become important to you. Nothing is more aggravating than finding an operational flaw in the supply chain. Managers of supply chains, across sectors, will concur that there is nothing more disheartening than:

  • Delays in the manufacturing process
  • Products that are incorrect or damaged are not accepted
  • Falling behind on delivery commitments
  • Supply chain disruptions that are unanticipated

Although many unplanned events or incidents are beyond human control, typical supply chain problems may be traced back to ineffective supply chain management and how effectively inventory is transferred from manufacturer to store to end user.

With the expanding use of omnichannel selling, having complete control over your layered, dynamic, and complex distribution ecology has become a must.

This article provides a general introduction to distribution management, how it works, and the various ways you may use a 3PL partner to improve your operations.

What is distribution management?

The distribution management process entails monitoring the movement of finished products from a manufacturer or supplier to an end user.

During this procedure, there are numerous activities and procedures that occur, including storage, inventory management, warehouse picking and packing, and last-mile delivery.

Distribution management that has been effectively implemented might assist to improve the order fulfillment process, inventory turnover rate, profit margins, supply chain agility, and ultimately consumer satisfaction. 

Distribution management: What is the purpose of distribution management in ecommerce?

The goal of distribution management is to ensure that product flows through the supply chain. The effectiveness of distribution management has a big influence on profit margins and brand development speed.

Deadstock, in this example, means overspending on storage. Alternatively, if you’re not replenishing inventory fast enough, it might result in missed sales, backorders, and stockouts.

Distribution management is a brilliant method to guarantee that:

  • Customers are reached in the quickest, most efficient manner possible by efficiently allocating inventory to them.
  • With enough stock to match demand while reducing storage expenses, there is enough of everything.
  • Business owners have the necessary insight into operations to make adjustments and judgments.

4 distribution management channels

Physical distribution of inventory is an important element of supply chain management.

To comprehend distribution logistics, it’s necessary to know about the many sorts of distribution channels and how inventory flows through the supply chain.

1. Wholesaler

Wholesalers distribute either raw materials or finished products at a low price to manufacturers, distributors, and retailers.

Wholesalers frequently deal in the distribution of raw materials that are used to produce a completed product. Fabric wholesalers, for example, supply goods to garment manufacturers, so they can create finished clothing.

2. Retailer

A supplier, manufacturer, or wholesaler is the ideal partner for a business. A major shop may use a variety of suppliers and distribution methods to reach its ultimate clients. 

For example, while Walmart and Target purchase goods from different manufacturers to sell them online or in their physical stores, they may not be sold together due to internal branding.

3. Distributor

Distributors act as go-betweens between the manufacturer and the wholesaler or retailer. Manufacturers authorize distributors (who are familiar with the market) to sell their goods when they wish to expand their regional distribution.

Distributors may also provide logistical and storage assistance in the region. Carmakers, for example, distribute the most recent vehicles to dealerships all around the world so that they may be sold directly to consumers locally. 

4. Ecommerce

Ecommerce has opened the door for direct-to-consumer (DTC) companies in modern times, which deliver goods directly to the end user (often, at their homes). Online merchants collaborate with manufacturers and suppliers to place orders for merchandise and have it stored in an ecommerce warehouse.

When goods are ordered and received through the Internet, they’re picked, packed, and sent straight from the company. Ecommerce fulfillment has removed the middleman from the supply chain, allowing for faster delivery, cheaper pricing, and superior customer support.