For businesses, distribution management has been a constant point of bother. There are plenty of instances with raw materials arriving too early and getting wasted before being used. In many cases, finished goods reach much late to customers, allowing competitors to cash in.
An efficient distribution management solution is extremely vital. The extent went up to a level that even its sub-category practices became important sectors of supply chain and inventory management. Overall, successful distribution consists of several moving methods that require a strong strategy fueled by real-time information.
What Is Distribution Management?
The process of monitoring the movement of goods from providers to manufacturers to wholesale merchants to retailers, all the way to end consumers, is referred to as distribution management. Several processes in the form of packaging, warehousing, inventory, vendor management, and sometimes, even, blockchain.
Distribution Vs Logistics-
Logistics is the detailed sketch of the planning and methods involved in facilitating an efficient supply and transportation of products. It involves activities related to ERP like supply management, temperature controls, bulk and shipping packaging, fleet management, shipment tracking, delivery routing, and warehousing. Perhaps, the easiest interpretation of logistics is to think of it as ‘physical distribution’.
Distribution is a sub-section of logistics that relate more to the idea of ‘order-fulfillment’ across multiple channels. A distribution channel refers to a chain of efficient agents who ensure that a product or service moves on its destined path from the origin to a customer. These include third-party distributors, retailers, or eCommerce websites. The process of distribution is inclusive of activities like commercial packaging, fulfillment, and shipping. In other words, distribution is mostly referred to as ‘commercial or sales distribution’.
Here are the top five business verticals that are most benefitted from effective Distribution Management System.
All around the globe, FMCG companies take advantage of huge market potentials. This is mainly owing to the population size and an efficient connection among organized and unorganized sectors via a strong distribution management solution.
With huge volumes of production and a widespread outreach of channel partners, manufacturers find it difficult to manage the entire distribution network. Hence, to overcome these sets of challenges, Distribution Management System come to the rescue. In simple terms, DMS leverages manufacturers to take complete control of the entire distributor network by collaborating with their Tally for important and timely business decisions.
In the automobile industry, the four major challenges faced by dealers and distributors are:
- Inefficient channel management
- Stock mismanagement
- Lack of tech Infrastructure
- Absence of actionable data and information
Hence, the implementation of an effective distribution management solution can contribute towards adding substantial value to automobile manufacturers. It can help various distributors and dealers to acquire specific sales data from records coming in from all over the country. This leverages them to take complete control over pricing structures. These insights enable them to make knowledgeable business decisions regarding discounts and promotional campaigns.
The basic idea behind the eCommerce business is about the purchase and selling of goods over the internet and the movement of these goods among the two parties. The dispatch of the correct product quantity at the right time to the right person is extremely crucial and hence, the importance of Distribution Management System is even more enhanced.
A quick, uninterrupted and secure distribution network is a vital aspect of the eCommerce business. A seamless and effective distribution management in eCommerce businesses can reduce costs and maximize capital utilization. Customers, specifically, prefer those websites that have a proper DMS network in place that can help them procure the right products at the right time.
For Import and export businesses, a DMS can help determine the cost and profitability of products, maintain a robust and constant pricing strategy and benefit from better visibility into product inventories.
In many situations, certain hidden costs are involved in the process of making a few gods available for sale. The true cost ends up being much higher than the cost that’s paid to the vendor. Additionally, there are complications in the form of handling freight, tackling customs, and duty costs.
Almost 72 percent of shoppers prefer cross-border merchants owing to better pieces. Often, custom duties and fees come in their way as a hindrance.
Landed costs are vital as they help calculate your profit margins for numerous international transactions. Erasing these hidden costs from the final price of products can help your business attract more customers. Hence, distribution management comes in handy for these businesses, helping them attain more gains.
At its core functionality, a distribution management solution will help you pick, pack, and ship orders, effortlessly. A fully capable DMS network will include capabilities such as order fulfillment, inventory control, and purchasing.
5. Oil and Gas:
Over the past few years, companies in the oil and gas sector have experienced business operations in the pattern of ‘boom to bust’. Operators demoralized by crumbling crude prices had to compromise heavily on logistic expenses.
Hence, oil-field service and equipment (OFSE) companies have seen several businesses evaporate. They were forced to cut down on costs. In some cases, business owners had to switch business models in response to the scenario. However, on a positive note, for sustainable cost reductions and long-term profitability, both operators from distribution management networks and OFSE companies have collaborated, yet again.
A distribution Management System can come in handy with offerings like cost-cutting and newer revenue models for large businesses in the field. Going forward, OFSE companies should look towards an anticipated future and aim towards getting their figures back on track with massive help from efficient DMS networks.
A strong distribution management solution involves the selling process of your product along with the assurance of sufficient stocks in respective channels. It is also inclusive of managing the promotional activities of these products in the relevant channels and other requirements. The associated supply chain must be cost-effective to an extent that the distribution management process is conducted seamlessly. The end result is to support the marketing campaign and maximize the profit figures.