What is Distribution Management? Definition & Management Channels

Nothing is more annoying for supply chain executives and distribution management than:

  • Manufacturing delays
  • Delivery of wrong or damaged products
  • Falling behind on fulfilling orders
  • Unexpected supply chain disruptions

While uncommon supply chain difficulties are beyond our control, common supply chain problems may generally be traced back to poor inventory flow from manufacturer to retailer to end user.

With the popularity of omnichannel retailing, total management over your layered, dynamic, and complex distribution system has become a must.

This article examines what distribution management is, how it works, and how you may benefit from having a 3PL partner.

What is distribution management?

Distribution management is the process of keeping track of the transfer of finished products from a producer or supplier to an end-user.

Throughout this procedure, several activities and procedures take place, including storage, inventory management, warehouse picking and packing, as well as last-mile delivery.

Distribution management that is properly implemented may assist to enhance the order fulfillment process, inventory turnover rate, profit margins, supply chain agility, and ultimately consumer pleasure.

Distribution management: Why is it important for ecommerce?

The objective of distribution management is to ensure that inventory moves through the supply chain. Distribution management’s effectiveness has an impact on profitability margins and a company’s growth potential.

For example, if you’re overpaying for storage, it’s possible that you’ve acquired too much deadstock. Alternatively, if you aren’t restocking inventory fast enough, it can result in lost sales, backorders, and stockouts.

When done correctly, distribution management is one of the most intelligent methods to ensure that:

  1. The goods are dispensed as quickly as possible to reach clients in the best way and with the fewest resources.
  2. There is adequate inventory to meet demand while lowering storage expenses.
  3. Business owners have enough insight into operations to make improvements and informed judgments.

4 distribution management channels

Physical distribution of goods is a key element of supply chain management.

To comprehend distribution logistics, you must first grasp the many sorts of distribution channels and how goods flow through the supply chain.

1. Wholesaler

Wholesalers supply bulk quantities of raw materials or completed items at a low price and may be purchased by manufacturers, distributors, or retailers.

Wholesalers are frequently involved in the supply of raw materials that go into finished items. Fabric wholesalers, for example, provide materials to textile manufacturers, who then create completed clothing.

2. Retailer

A merchant has the choice of dealing directly with a wholesaler, manufacturer, or supplier. To reach their end consumers, major retailers frequently distribute goods from various suppliers across many sales channels.

Walmart and Target, for example, order goods from different manufacturers in order to sell them online or in their physical stores.

3. Distributor

Distributors serve as the link between manufacturers and wholesalers or retailers. Manufacturers promote distributors (who are familiar with the local market) to sell their goods in order to grow their regional distribution.

Many times, distributors provide logistical and storage assistance in their own regions. For example, automobile companies distribute the newest automobiles to dealerships in several countries so that they can be sold locally to the end customer.

4. Ecommerce

Direct-to-consumer (DTC) companies have flourished in modern times, delivering items directly to the consumer (often at their homes). Ecommerce warehouses store inventory for online retailers, who work with manufacturers and suppliers to place orders.

When your products are received and purchases are placed online, they’re immediately picked, packed, and sent from the company. Ecommerce fulfillment has removed the middleman from distribution management, allowing for quicker delivery and more affordable pricing.