DISTRIBUTION MANAGEMENT

(Retail & Distribution Management)

Submitted in Partial Fulfillment for the Award of the Degree of

(Masters in Business Administration) 2019-2021

Submitted by: Jatin Verma

University PRN:1928101289

BHARATI VIDYAPEETH DEEMED TO BE UNIVERSITY, PUNE SCHOOL OF

DISTANCE EDUCATION, PUNE
Academic Study Center - BVIMR, New Delhi An
ISO 9001:2008 Certified Institute NAAC
Accredited Grade “A” University
 Format of Student Undertaking Certificate of Originality

I (JATIN VERMA, MBA (G) SEM-4th) would like to declare that the project report
entitled “Distribution Management”

Submitted to BHARATI VIDYAPEETH UNIVERSITY PUNE, School of

Distance Education Pune, Academic Study Centre BVIMR New Delhi in
partial fulfillment of the requirement for the award of the degree.

It is an original work carried out by me under the guidance of YASHWANT

SIR.

All respected guides, faculty member and other sources have

been properly acknowledged and the report contains no
plagiarism.

To the best of my knowledge and belief the matter embodied in this project
is a genuine work done by me and it has been neither submitted for
assessment to the University nor to any other University for the fulfillment
of the requirement of the course of study.

JATIN VERMA MBA(G) 4th

SEMESTER PRN NO.
1928101289
 Table of Contents

Chapter 1:

1-5
Introduction to the topic
Objective and Vision of Projects,
Literature Review

Chapter 2:

6-7
Research Methodology
Research Design (Exploratory, Analytical etc.)
Data Collection

Chapter 3: Primary and Secondary data

8-26

Findings & Analysis

Chapter 4:

27

Conclusion

Chapter 5:

28-29

Recommendations / Suggestions

Chapter 6:
Chapter 7:

Limitation of the Study 30-31

Chapter 8:

Bibliography 32
 INTRODUCTION
Distribution management has long been a business challenge. Raw goods can arrive too early and go bad before
they are used. Or, finished products can arrive too late, allowing a competitor to seize the lion’s portion of
market share.

Effective distribution is so crucial that sub-discipline practices became an integral part of supply
chain and inventory management, such as just in time inventory. Overall, successful distribution involves many
moving parts and methods requiring a strong distribution management strategy fuelled by real-time information.

What Is Distribution Management?

Distribution management is the process used to oversee the movement of goods from supplier to manufacturer
to wholesaler or retailer and finally to the end consumer. Numerous activities and processes are involved,
including raw good vendor management, packaging, warehousing, inventory, supply chain, logistics and
sometimes even blockchain.

What Is a Distributor?
A distributor is an entity that supplies products to retailers and other businesses that sell directly to consumers.
Take, for example, a wholesale liquor distributor that supplies alcohol to restaurants, grocery stores and liquor
stores.

Other examples include a produce distributor that supplies lettuce, tomatoes and other produce to restaurants;
and a pharmaceutical distributor that supplies a variety of prescription-controlled drugs to pharmacies.

Distribution vs. Logistics

Logistics refers to the detailed planning and processes involved with the effective supply and transportation of
goods. Logistics includes activities and processes such as supply management, bulk and shipping packaging,
temperature controls, security, fleet management, delivery routing, shipment tracking and warehousing. It is
perhaps easiest to think of logistics as physical distribution.

Distribution is a management system within logistics that is focused on order fulfilment throughout distribution
channels. A distribution channel is the chain of agents and entities that a product or service moves through on
its way from its point of origin to a consumer. Examples of distribution channels include ecommerce websites,
wholesalers, retailers and 3rd party or independent distributors. Distribution includes activities and processes
such as consumer or commercial packaging, order fulfilment and order shipping. In short, distribution is most
easily understood as commercial or sales distribution.

1
Why Is Distribution Management Important?

Distribution management is first and foremost about organizing everything involved in getting goods to the
buyer in a timely fashion and with the least amount of waste. Therefore, it has a direct impact on profits.

Fig: 1.1

2
 OBJECTIVES OF DISTRIBUTION MANAGEMENT

The main objectives of distribution in marketing are as follows:

1. Movement of goods

The main objective of distribution is to make flow of goods from production place to consumption place. For
this, the role of the distribution channel system and its members becomes very important.

2. Availability of goods

The objective of distribution function is to make or supply necessary goods to the large masses of customers
living indifferent geographical areas.

3. Protection of goods

The objective of distribution is also to properly storing, handling and protecting the goods and supplying them
to the consumers in good condition.

4. Cost reduction

The objective of distribution is also to reduce cost of product by bringing effectiveness in distribution process.

5. Customer satisfaction

The other objective of distribution function is to help consumers feel satisfied through effective distribution.

3
 LITERATURE REVIEW

Marketing channel decisions are among the most important decisions that management faces today.
Indeed, if one looks at the major strategy of the marketing mix (product, price, promotion and distribution), the
greatest potential for achieving a competitive advantage now lies in distribution

Distribution, as one of four elements of marketing complex, is an inseparable part of marketing decisions
which involves all the decisions about distribution of products to the end user. The issues of distribution were
analysed by a number of marketing specialists, paying a big attention to the elaboration of the procedures of
marketing channel design

Distribution still offers a new frontier for competing successfully, especially if the emphasis is placed
on the design and management of superior marketing channel systems to provide excellent customer services.
Yet designing optimal marketing channel systems to boost sales, formulating innovative distribution strategies
and managing channels system effectively is no simple task.

The very earliest formal conceptions of marketing channels focused on the functions performed by a
distribution system and the associated utility of these functions and the overall system. Reflecting their presence
in industrial and transitional

economies, marketing channels gradually came to be viewed as the set of interdependent organizations involved
in the process of making a product or service available for use or consumption. This institutional oriented
perspective draws attention to those members (e.g. wholesalers, distributors, retailers, etc.) comprising the
distribution system and engaged in the delivery of goods and services from the point of conception to the point
of consumption. The management of such institutions through marketing channel management involves the
planning, organizing, coordinating, directing and controlling efforts of channel members .

In general, the concept of distribution refers to where and how product and services are to be offered for
sale, all essential mechanism and logistical supports for the transfer of goods and services as well as ownership
of goods and services to the customers. A successful marketing channel ensures that a desired product is
distributed in a desired amount to a desired channel to satisfy the desired consumer .

One of the initial problems encountered when the area of integrated distribution is discussed is the
problem of definition. No single "model" distribution system can be tailored for all business firms. The
distribution function, like other functions of the firm, must be developed within the framework of management
philosophy and available resources of the individual firm. During the 1960s, three characteristic or identifiable
approaches to integrated distribution management have emerged. They are: physical distribution management,
materials management and business logistics.

Research devoted to channel management has played an important role in the marketing discipline for
over 40 years. Two main areas of channels research in marketing have evolved. First, how channels are
organized or structured has been a focal point, centering on the level of channel integration, reliance on multiple
channels, distribution intensity and organizational policies relating to centralization, formalization,
standardization, and Second, how ongoing channel relationships are coordinated in a behavioral sense has been
even more prominent, dealing with methods of channel governance, including the impact of contracts, the

4
development and application of interfirm power, communication approaches, levels of control and conflict, and
the attainment of trust and commitment.

Development of Channel Structure

A channel of distribution can be defined as the collection of organization units, either internal or external
to the manufacturer, which performs the functions involved in product marketing. These functions are
persuasive and include buying, selling, transporting, storing, grading, financing, market risk bearing and
providing marketing information. A channel member is an individual organization unit institution or agency that
performs one or more of the marketing functions and by doing so has an active role in the channel of
distribution .

The marketing channels literature has given considerable attention to the study of channel structure.
Early researchers discussed channel structure in terms of the functions performed by channel members. The
basic idea was that these functions could be allocated in different mixes among the various channel members
depending on the characteristics of the channel. As structure research evolved, several common elements
emerged, which were seen as varying across different channels, including: the number of channel levels (i.e.,
number of intermediaries involved), the intensity at the various levels (the number of intermediaries at each
level of distribution), and the types of intermediaries at each level (i.e., retailers, wholesalers, distributors). Thus,
channel structure was essentially treated at a micro level, rather than examining the more macro issues such as:
how firms decide who will perform what activities, the costs and trade-offs involved in using various channel
strategies, and various extraneous factors affecting channel relations.

Starting from the 70’s, tremendous strides have been made in the understanding of how firms should
organize and manage their channels of distribution. Still, the researchers have barely touched the surface of all
the managerial issues that have been addressed. Furthermore, many issues of managerial importance relating to
the organization and management of channels of distribution have received no attention in empirical research.

More recent research in channel structure examines both macro and micro issues. The majority of the
current research on channel structure focuses on one of two broad operationalizations of structure: transactional
form or bureaucratic form. Though it could be argued that the degree of rationalism also reflects the structure
of the relationship, transactional form and bureaucratic form are the most widely accepted .

5
 Research Methodology

A research process consists of stages or steps that guide the project from its conception through
the final analysis, recommendations and ultimate actions. The research process provides a
systematic, planned approach to the research project and ensures that all aspects of the research
project are consistent with each other

INTRODUCTION

This chapter aims to understand the research methodology establishing a framework of

evaluation and revaluation of primary and secondary research. The techniques and concepts
used during primary research in order to arrive at findings; which are also dealt with and lead
to a logical deduction towards the analysis and results.

RESEARCH DESIGN

I propose to first conduct a intensive secondary research to understand the full impact and
implication of the industry, to review and critique the industry norms and reports, on which
certain issues shall be selected, which I feel remain unanswered or liable to change, this shall
be further taken up in the next stage of exploratory research. This stage shall help me to restrict
and select only the important question and issue, which inhabit growth and segmentation in the
industry.
The various tasks that I have undertaken in the research design process are :
❑ Defining the information need

❑ Design the exploratory, descriptive and causal research.

RESEARCH PROCESS

The research process has four distinct yet interrelated steps for research analysis It has
a logical and hierarchical ordering:
 Determination of information research problem.

 Development of appropriate research design.

 Execution of research design.

 Communication of results.

Each step is viewed as a separate process that includes a combination of task , step and specific
procedure. The steps undertake are logical, objective, systematic, reliable, valid, impersonal
and ongoing.

6
EXPLORATORY RESEARCH
The method I used for exploratory research was
❑ Primary Data

❑ Secondary data

PRIMARY DATA

New data gathered to help solve the problem at hand. As compared to

secondary data which is previously gathered data. An example is information
gathered by a questionnaire. Qualitative or quantitative data that are newly
collected in the course of research, Consists of original information that comes
from people and includes information gathered from surveys, focus groups,
independently, observations and test results

Data gathered by the researcher in the act of conducting research. This is

contrasted to secondary data which entails the use of data gathered by
someone other than the researcher information that is obtained directly from
first-hand sources by means of surveys, observation or experimentation.
Primary data is basically collected by getting questionnaire filled by the respondents.

SECONDARY DATA

Information that already exists somewhere, having been collected for another
purpose. Sources include census reports, trade publications, and subscription
services. Data that have already been collected and published for another
research project (other than the one at hand). There are two types of secondary
data: internal and external secondary data. Information compiled inside or
outside the organization for some purpose other than the current investigation.

Secondary source of data used consists of books and websites

My proposal is to first conduct a intensive secondary research to understand
the full impact and implication of the industry, to review and critique the
industry norms and reports.

7
DISTRIBUTION MANAGEMENT
 Elements of Distribution Management
 Channels of Distributions
 Factors Influencing Distribution Management

8
ELEMENTS OF DISTRIBUTION
MANAGEMENT

9
 MATERIAL HANDLING
Material handling is much more than the handling of inventory. It’s the movement, protection,
storage and control of materials and products throughout their lifespan of manufacturing,
warehousing, distribution, consumption, and disposal. Material handling encompasses a range
of components to keep the supply chain running. This includes a variety of equipment types
(manual, semi-automated, and automated) and systems (single-level storage, multi-level
storage, conveyors, etc.).
Efficiency is the name of the game when structuring your material handling system. Efficient
logistics are a necessity when reacting to and planning for customer and warehouse
requirements. Because inbound inventory’s material handling processes are just important as
out bound’s processes.

Material handling process has four dimensions that impact efficient product flow through your
warehouse: Movement, Time, Quantity, Space

o Movement: moving product from Receiving to Outgoing

 Time: how long products live in storage, receipt of inventory-to-shipment time frame
 Quantity: how much product can be storage in the allotted space
 Space: how much space is allotted or available

Material handling improves efficiency by making the logistics system respond quickly and
effectively to plant and customer requirements. For efficient movement of goods into the
warehouse, locating stock, accurately filling orders, and rapidly preparing orders for shipment
to customers. Materials handling is very important to outbound logistics. In inbound logistics
terms, materials handling serves company plants in the same way. Firms need to integrate
materials handling requirements not only for the company’s departmental needs, but also for
meeting their customers’ needs.

Fig 3.1

10
 INVENTORY PLANNING AND CONTROL

What is Inventory Planning?

Inventory represents often the biggest part of a retail business’s assets – up to 80% of cash is
usually tied up in inventory. Holding inventory is unavoidable as it allows organizations to
operate continuously. However, having too much inventory is damaging to a healthy cash flow
and holds business growth as the money tied up in excessive inventory can’t be invested in
other areas of the business.

Inventory planning is an integral part of a company’s supply chain management strategy,

alongside order management, accounting, warehouse operations, and customer management.

Inventory planning involves forecasting demand and deciding exactly how much inventory and
when to order. When done successfully, this helps companies meet demand whilst reducing
expenditure.

In other words, by having just the right amount of inventory at the right time, in the right
location, businesses reduce the overall cost of storing merchandise, optimize inventory
allocation routes, and ensures that there is always the right amount of stock to meet customer
demand (whilst avoiding surplus stock in obsolescence or overstocking).

Fig 3.2

As a result inventory planning improves customer satisfaction rates by preventing overselling.

Consistent service levels also breed loyal customers.

In order to establish a reliable inventory planning, businesses and organizations must do three
things. These are:

When these three workflows exist in tandem, inventory flows continuously, seamlessly, and
efficiently. But, of course, maintaining such a complex operation comes with some challenges.

11
 ORDER PROCESSING

What is order management?

Order management refers to the process of receiving, tracking, and fulfilling customer orders.
The order management process begins when an order is placed, and ends when the customer
receives their package.

When scaling your business, it’s important to automate and streamline this process —
otherwise, you’ll eventually be overwhelmed by the sheer number of orders coming in.

What is an order management system?

An order management system gives you a one-stop shop to view and manage all customer
orders in one place.

Some systems offer a two-way sync that makes sure order information is passed between your
order management system and your ecommerce platform while providing you with visibility
into the entire process. This can help automate the flow of sales order information to every
piece of the retail supply chain.

That means you can track the entire journey of a customer order, from the “Buy” button to
delivery — and even returns.

In short, an order management system organizes and automates everything that needs to happen
to get customers what they ordered on time and in good condition.

What is order processing?

Order processing is the process or work flow from order placement to delivery. This is a key
element of retail order fulfillment, where reliability and accuracy lead to customer satisfaction.

Steps in order processing include picking, sorting, tracking and shipping. Order processing can
range from manual processes (hand written on an order log sheet) to highly technological and
data-driven processes (through online orders and automated order processing software)
depending on the operation.

Why your business needs accurate order management

Taking the time to implement order management processes and systems can seem like extra
red tape when you’re bootstrapping business processes with a small team.

12
But as you grow your business, you may fall behind trying to fulfill every single order on your
own. Here are just a few of the problems solved by accurate order management.

1. Keep from overstocking and under-stocking

A high inventory turnover ratio can be a good thing as long as you’re not over or under-
stocking.

Overstock and you’re sinking cash you can’t afford on unused products collecting dust before
they hopefully sell one day.

Under-stock and you risk making customers wait, splitting shipments, or losing easy sales
entirely from customers who were ready to buy now but will probably end up giving that money
to your competitor instead.

ShipBob’s order and inventory management software allows merchants to clearly see seasonal
trends in inventory levels so that they know whether to prepare for a decline or an increase in
sales.

Online apparel company FLEO Shorts, for instance, will send new inventory to ShipBob
weekly:

“It’s really easy to create new SKUs and restock existing ones using ShipBob’s technology,
which is especially important with high inventory turnover,” confirms co-founder Carl Protsch.

This helps ensure that businesses like FLEO don’t run out of products, keeping the business
profitable and customers happy.

2. Fewer mistakes on fulfilling orders

It’s easy to avoid fulfillment mistakes when you’re only shipping a few orders a day.

You simply pick the right product, package it well, print the shipping label, and send it off..

Now imagine that your business takes off. Orders are coming in 24/7 from all over the world
through multiple channels. Meanwhile, customers are bombarding you with messages
inquiring about their order status, complaining about delivery times, and asking for refunds.

It’s only human to start making mistakes when you are dealing with this high volume of orders
and level of complexity. Wrong products, wrong addresses, delayed shipments… these can
damage the reputation of a growing ecommerce business.

That’s why it’s so important to have a streamlined order management system in place. More
automation and synchronicity means less human error. Things may still go wrong once in
awhile — oftentimes, that’s inevitable — but you’ll be able to scale your business without
becoming overwhelmed.

13
3. Reliable information that helps you make data-driven decisions

It’s hard to make sense of data when it’s scattered across multiple platforms.

Order management systems allow you to see all sales order data in one place, making it easier
to analyze the available information and make data-driven decisions.

For example, ShipBob’s order management system shows you how your customers’ orders are
distributed geographically. You can use that information to split your inventory across the
fulfillment centers closest to the majority of your customers. Storing your inventory closer to
where your customers live is a great way to reduce shipping costs and increase delivery speed.

Order management systems also make it easier to identify real-time problems because you can
see the whole process from a birds’ eye view instead of as separate fragments.

The ability to make data-driven decisions can save you money in the long run. When order
volume is high, fixing even the smallest inefficiency can drive supply chain optimizations and
have a significant impact on your bottom line.

Fig :3.3

14
4. Less wasted time

If you run an ecommerce business, chances are that you’re a creator, entrepreneur, or visionary.
Sometimes all three.

But you know what probably doesn’t appear on that list? Ecommerce fulfillment expert— and
rightfully so. Every hour spent troubleshooting fulfillment issues is an hour that could be spent
on growing your business through more strategic activities like product development or
building your brand.

Think about it: Is managing inventory, packaging products, shipping orders, and handling
refunds really the best use of your time? It’s okay to do everything yourself when you’re just
starting out, but there comes a point when it simply doesn’t make sense anymore.

15
 TRANSPORTATION

Transportation is a major cost center, with outbound transportation accounting for as much as
half of total supply chain costs. Yet transportation is often ignored or optimized at the expense
of other parts of the supply chain, such as inventory or service levels.

Retailers who want to effectively manage their transportation face a convoluted jumble of rates,
surcharges, accessorials, freight classifications and tariffs. Sedlak’s transportation management
experts help clients sort through and quantify these complexities to realize cost savings and
improved service.

Our analysts utilize a proven, data-driven approach to determine client business requirements
and develop the decision criteria for potential transportation improvement opportunities,
including contract renegotiation and freight consolidation strategies. We also help clients
develop performance metrics and select and implement systems to better assess and manage
their transportation operations.

Retail Transportation Management Services

 Transportation operations assessments

 Accessorial charge and freight payment audits
 Core carrier program development
 Last mile and parcel delivery optimization
 Fleet optimization
 Transportation mode strategies
 Prepaid-to-collect conversion
 Outsourcing support
 TMS systems selection and implementation

Fig: 3.4

16
 COMMUNICATION

The Impact of Poor Communication

When you’re competing with the Amazons of the world, excellence is what will keep your
company humming along. So it’s important to understand that when shipments slip through the
cracks, there is one foundational reason it happens: poor communication.

Poor communication is all too common in shipping and logistics. A big reason: The sheer
number of involved parties across each supply chain. Most supply chains involve some or all
of these parties:

 An internal shipping and logistics team

 An internal accounting or finance team

 An internal operations team

 Employees at your retail locations and warehouses

 Manufacturers

 Consignors

 Consignees

 Customs agents

 Origin and destination agents

 Freight forwarders

 Shipping carriers

Whew! That’s a lot of involved parties. It’s easy to see how lines can get crossed.

Poor communication can lead to all kinds of problems in supply chain operations, such as:

17
  Stagnant or late deliveries

 Lost items

 Demurrage and storage fees, as well as additional chassis fees

 An inability to plan inventory turn

 An inability to forecast supply chain costs

 Unhappy customers

 Bad internet reviews

 A breakdown in work relationships

Of course, the biggest problem is that bringing all these parties together on one page feels like
a momentous hurdle in and of itself.

The Impact of Good Communication

Shipping is an old practice, and its system hasn’t caught up much with the times. Many
companies try to fix these supply chain problems by outsourcing their services or accepting
that some items will simply slip through the cracks.

Over time, building the communications core of your company will positively impact every
corner of your business. You’ll see improvements to your:
Employees’ happiness and performance.

Productivity improves 20-25% in organizations with connected employees, according to a

study by the McKinsey Global Institute.

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 ORGANISATIONAL STRUCTURE

What Is an Organizational Structure?

An organizational structure is a system that outlines how certain activities are directed in order
to achieve the goals of an organization. These activities can include rules, roles, and
responsibilities.

The organizational structure also determines how information flows between levels within the
company. For example, in a centralized structure, decisions flow from the top down, while in
a decentralized structure, decision-making power is distributed among various levels of the
organization.

Having an organizational structure in place allows companies to remain efficient and focused.

 An organizational structure outlines how certain activities are directed to achieve the
goals of an organization.
 Successful organizational structures define each employee's job and how it fits within
the overall system.
 A centralized structure has a defined chain of command, while decentralized structures
give almost every employee receiving a high level of personal agency.
 Types of organizational structures include functional, divisional, flatarchy, and matrix
structures.
 Senior leaders should consider a variety of factors before deciding which type of
organization is best for their business, including the business goals, industry, and
culture of the company.

Understanding an Organizational Structure
Businesses of all shapes and sizes use organizational structures heavily. They define a
specific hierarchy within an organization. A successful organizational structure defines each
employee's job and how it fits within the overall system. Put simply, the organizational
structure lays out who does what so the company can meet its objectives.

This structuring provides a company with a visual representation of how it is shaped and how
it can best move forward in achieving its goals. Organizational structures are normally
illustrated in some sort of chart or diagram like a pyramid, where the most powerful members
of the organization sit at the top, while those with the least amount of power are at the bottom.

Not having a formal structure in place may prove difficult for certain organizations. For
instance, employees may have difficulty knowing to whom they should report. That can lead
to uncertainty as to who is responsible for what in the organization.

Having a structure in place can help with efficiency and provide clarity for everyone at every
level. That also means each and every department can be more productive, as they are likely to
be more focused on energy and time.

Centralized vs. Decentralized Organizational Structures

An organizational structure is either centralized or decentralized. Traditionally, organizations
have been structured with centralized leadership and a defined chain of command. The military
is an organization famous for its highly centralized structure, with a long and specific hierarchy

19
of superiors and subordinates. In a centralized organizational system, there are very clear
responsibilities for each role, with subordinate roles defaulting to the guidance of their
superiors.

There has been a rise in decentralized organizations, as is the case with many
technology startups. This allows companies to remain fast, agile, and adaptable, with almost
every employee receiving a high level of personal agency. For example, Johnson & Johnson is
a company that's known for its decentralized structure. As a large company with over 200
business units and brands that function in sometimes very different industries, each operates
autonomously. Even in decentralized companies, there are still usually built-in hierarchies
(such as the chief operating officer operating at a higher level than an entry-level associate).
However, teams are empowered to make their own decisions and come to the best conclusion
without necessarily getting "approval" from up top.

Types of Organizational Structures

Functional Structure
Four types of common organizational structures are implemented in the real world. The first
and most common is a functional structure. This is also referred to as a bureaucratic
organizational structure and breaks up a company based on the specialization of its workforce.
Most small-to-medium-sized businesses implement a functional structure. Dividing the firm
into departments consisting of marketing, sales, and operations is the act of using a bureaucratic
organizational structure.

Divisional or Multidivisional Structure

The second type is common among large companies with many business units. Called the
divisional or multidivisional structure, a company that uses this method structures its leadership
team based on the products, projects, or subsidiaries they operate. A good example of this
structure is Johnson & Johnson. With thousands of products and lines of business, the company
structures itself so each business unit operates as its own company with its own president.

Flatarchy Structure
Flatarchy, a newer structure, is the third type and is used among many startups. As the name
alludes, it flattens the hierarchy and chain of command and gives its employees a lot of
autonomy. Companies that use this type of structure have a high speed of implementation.

Matrix Structure
The fourth and final organizational structure is a matrix structure. It is also the most confusing
and the least used. This structure matrixes employees across different superiors, divisions, or
departments. An employee working for a matrixed company, for example, may have duties in
both sales and customer service.

20
CHANNEL OF DISTRIBUTION

21
 CHANNEL OF DISTRIBUTION

A distribution channel is a path by which all goods and services must travel to arrive at the
intended consumer. Conversely, it also describes the pathway payments make from the end
consumer to the original vendor. Distribution channels can be short or long, and depend on the
number of intermediaries required to deliver a product or service.

Goods and services sometimes make their way to consumers through multiple channels—a
combination of short and long. Increasing the number of ways a consumer is able to find a good
can increase sales. But it can also create a complex system that sometimes makes distribution
management difficult. Longer distribution channels can also mean less profit each intermediary
charges a manufacturer for its service.

Direct and Indirect Channels

Channels are broken into two different forms—direct and indirect. A direct channel allows the
consumer to make purchases from the manufacturer while an indirect channel allows the
consumer to buy the goods from a wholesaler or retailer. Indirect channels are typical for goods
that are sold in traditional brick-and-mortar stores.

Generally, if there are more intermediaries involved in the distribution channel, the price for a
good may increase. Conversely, a direct or short channel may mean lower costs for consumers
because they are buying directly from the manufacturer.

Types of Distribution Channels

While a distribution channel may seem endless at times, there are three main types of channels,
all of which include the combination of a producer, wholesaler, retailer, and end consumer.

The first channel is the longest because it includes all four: producer, wholesaler, retailer, and
consumer. The wine and adult beverage industry is a perfect example of this long distribution
channel. In this industry—thanks to laws born out of prohibition—a winery cannot sell directly
to a retailer. It operates in the three-tier system, meaning the law requires the winery to first
sell its product to a wholesaler who then sells to a retailer. The retailer then sells the product to
the end consumer.

The second channel cuts out the wholesaler—where the producer sells directly to a retailer
who sells the product to the end consumer. This means the second channel contains only one
intermediary. Dell, for example, is large enough to sell its products directly to reputable
retailers such as Best Buy.

The third and final channel is a direct-to-consumer model where the producer sells its product
directly to the end consumer. Amazon, which uses its own platform to sell Kindles to its
customers, is an example of a direct model. This is the shortest distribution channel possible,
cutting out both the wholesaler and the retailer.

 A distribution channel represents a chain of businesses or intermediaries through which

the final buyer purchases a good or service.
 Distribution channels include wholesalers, retailers, distributors, and the Internet.
 In a direct distribution channel, the manufacturer sells directly to the consumer. Indirect
channels involve multiple intermediaries before the product ends up in the hands of the
consumer.

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  Choosing the Right Distribution Channel
Not all distribution channels work for all products, so it's important for companies to choose
the right one. The channel should align with the firm's overall mission and strategic vision
including its sales goals.

The method of distribution should add value to the consumer. Do consumers want to speak to
a salesperson? Will they want to handle the product before they make a purchase? Or do they
want to purchase it online with no hassles? Answering these questions can help companies
determine which channel they choose.

Secondly, the company should consider how quickly it wants its product(s) to reach the buyer.
Certain products are best served by a direct distribution channel such as meat or produce, while
others may benefit from an indirect channel.

If a company chooses multiple distribution channels, such as selling products online and
through a retailer, the channels should not conflict with one another. Companies should
strategize so one channel doesn't overpower the other.

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What is Distribution Management?

Distribution management includes forecasting, transportation, warehousing, and delivery

within the larger universe of logistics and supply chain management. These require precise
tracking, real-time information, and highly-skilled staffing to execute effectively.

Distribution management is an integral part of logistics.

While continually facing a spectrum of variables in their daily business, distribution

managers are charged with resolving the three fundamental questions:

1. When?
2. Where?
3. How Much?

Successful distribution management utilizes:

 State-of-the-art information systems

 Logistics software
 Highly efficient equipment
 Forecasting tools
 Warehouse inventory management systems (WMS)
 Excellent safety and training programs

6 Top Factors Influencing Distribution Management

Here are 6 top factors that we’ve seen influence logistics planning and distribution
management:

1. Customer Perspective

The ideal situation for any retailer or manufacturer is to have just enough inventory on hand to
sell or to keep production lines running smoothly. These customers wish to hold as little stock
as possible without running out.

Since most clients require several different items, each sold or used at a different pace,
forecasting the product mix becomes an integral part of their equation. Additional variables,
such as sales promotions at the retailer or seasonal inventory build by the manufacturer, can
make forecasting difficult.

2. Distributor Perspective

The perfect circumstance for distribution management is to have all fully loaded trucks
operating on regularly scheduled routes 100% of the time with a 100% safety record.

Since customer sales ebb and flow in real life, achieving this ideal objective is difficult.

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 Factors Influencing Distribution Management

In some circumstances, temperature control and other special handling can further complicate
the issue.

Also, an effective distribution and warehousing company strives to maintain the optimal
inventory with their suppliers to keep inventory management costs at a reasonable level without
excessive safety stock.

However, with the proper planning and execution, distribution management can effectively
mitigate these seeming opposing challenges.

3. Communication

Running out of product or component parts is the customer’s worst nightmare. Distribution
management must ensure the proper flow of information, forecasting, and accurate, safe, and
timely deliveries are provided.

In some scenarios, like with BR Williams, distributors are provided real-time sales information
electronically to replenish inventories automatically without traditional ordering. This type of
transparency allows each link in the supply chain to anticipate the needs of the end client and
to adjust their stock levels and arrange deliveries accordingly.

In these scenarios, the customer will also provide ongoing forecasts.

In other cases, open and continual communication with the customer will help the distributor
to anticipate inventory replenishment, schedule equipment and staff for delivery.

4. Planning & Measuring: Creating a Culture

The first step in preparation is to develop a customer-focused mission and company culture
that blends the importance of customer satisfaction with the realities of business profitability.

Measure every element of the business from forecasting, procurement, inbound freight
management, warehousing and inventory control to order processing, load consolidation,
delivery scheduling and backhauls. Working directly with employees in each discipline, look
for ways to make each process more efficient. Key considerations are cycle time, cost analyses,
on-time deliveries, accurate order fulfillment, and safety measurements.

Create a plan with contingencies for every situation and ensure that all staff has input into
making plans realistic.

5. Training & Commitment

Training employees to execute the needs of a distribution company is more than explaining
and showing “how” to perform a function. Underlying successful performance is a result of
individuals understanding “why” a job needs to be done right and the potential ramifications
of poor performance to the company’s future.

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The key for superior distribution management is to help new staff become familiar with all
aspects of the job to be able to make intelligent and independent decisions in the future.

6. Implementing the Right Tools: Warehousing and Distribution

Inventory management and warehouse management system (WMS) software can help to
optimize space within a warehouse. By maximizing existing space, companies can forestall
expensive expansion and create more efficient inventory placement.

Similarly, with loading and routing software, distributors can optimize vehicles and drive costs.
These tools incorporate load quantities and target arrival times with distance and drive time.
Optimizing the fleet is a substantial cost driver for a successful distribution management
company.

Successful Distribution Management

Pulling all of the variables together, making informed decisions, and striving to improve
performance each day is the key to distribution management success. Complacency has led to
the demise of many logistics companies, while innovation has created today’s leaders.

Reliability, anticipation, responsiveness, safety, and high efficiency are the attributes of a
genuinely successful distribution management company.

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 CONCLUSION
In conclusion, I must say that you have better information than yesterday. Take a quick look at
overall. So, the distribution process does not only enhance the business. But also it maintains
the overall business. Because of the distribution system, everything is going well. Above all
strategies and functions help you to understand the overall system.

Frequently Asked Questions

What is Supply Chain Management?

It is a chain of processes that comprises raw materials to manufacturers then the distributor to
retailers and lasts the consumer.

What is Logistics Management?

It is a part of the supply chain process. In this system, one company plans, implements, controls
the inventory, controls the goods coming in and the customer service, requirements, etc.

Importance of Distribution Management

As I discussed in the blog that it has many benefits. One is reduced extra cost, another is
maintained the logistics and sales and marketing.

How do I Find Distribution Management Jobs?

You can find supply chain management jobs such as inventory work, distributor, sales,
marketer jobs everywhere. The supply chain is a system that has different parts. So search on
Google and find a suitable job for you.

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 RECOMMENDATION AND SUGGESTIONS

The more steps there are in your logistics plan, the more efficient your entire process needs to
be. If several different materials need to be supplied to a certain location at different times,
your supply chain not only needs to be efficient, but also able to quickly respond to problems
as they arise. The larger your operation, the more difficult this becomes, and the more prepared
your business needs to be. To help your supply chain run as smoothly as possible, here’s our
top five tips for effectively managing your logistics.

1. Take the time to make a solid plan

Efficient logistics is all in the planning. The less decisions that need to be made off the cuff
during the transportation process, the better. And, while a solid plan can never cover every
extenuating circumstance, it will keep ad hoc choices to a minimum. A good logistics manager
will therefore make sure to plan well ahead in order to eliminate any delays in the supply chain
as best they can.

2. Always have a contingency plan

No matter how fool proof you think your logistics plan is, it’s impossible to prepare for every
possible eventuality. A good logistics manager therefore knows their job is far from done after
their plan has been made, as they need to follow the supply chain at every point and put out
fires whenever they crop up. To do this effectively, you should have contingencies for every
element of your logistics plan. You should also know when to stick it out with your original
plan and when to switch to your backup — something that can only come with experience.

3. Hire a logistics manager with strong interpersonal skills

When your logistics plans go awry, it’s crucial that the person tasked with sorting out the mess
has great interpersonal skills. This is because they’ll not only have to re-arrange things with
the employees within your business, potentially making life more awkward for them, but also
occasionally have to find a last-minute logistics supplier to fill in.

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If your logistics manager is good with people and has a solid network of industry contacts, he’ll
be well-equipped to get your business out of any logistics problems. Whether someone within
your business fits this profile or you need to look outside of the company, finding the right
person for this position is a part of effective logistics management.

4. Automate your systems wherever you can

In the digital age, there are a number of ways you can automate the logistics process, including
tracking and monitoring each delivery. These systems take the guesswork out of planning your
supply chain by reporting the raw data without bias. Ensuring your business is better informed
by using fleet and inventory management software will allow you to refine your processes
around the factors that impact your bottom line the most.

5. Learn from your mistakes

Depending on the size of your company, poor logistics management can cost your company up
to hundreds of thousands of pounds each year. Perhaps the most important thing you can do
when optimising your supply chain is to learn from your mistakes. Regularly sit down as a
team and openly discuss the mistakes you’ve made in the past, focussing on what systems
you’re going to put in place to ensure they don’t happen again.

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 LIMITATIONS

Distribution channels in India have primarily been traditional and unique. While the structure
of a distribution channel varies across industries, every business has a record that maintains
data about their inventory, sales and other crucial information that helps them make decisions
and understand their growth at a glance.

However, most distribution systems are complex and lack the new-age advancements to make
it interactive and yield real-time results. This has a negative effect on the business since channel
members have difficulty in getting an overview of the business and its growth. Lack of a well-
organized data deters the efficiency of the business and hinders effective decision-making
processes, which are two key problems that a good distribution management system should be
able to solve.

It is apparent that such inaccuracies in the database can affect the business, its growth and its
long-term goals. Therefore, it’s important that firms recognize and address these challenges to
create an organized and smoother workflow within their business.

Here are the few common challenges that companies face today:

Inaccurate Stock Management

Without an automated distribution system, the inventory of the business would require to be
tracked manually. This can turn out to be laborious and inefficient. Such a systemcan restrict
the ability to modify orders resulting in a tedious return and refund process.Moreover, lack of
digital record of the inventory, would make it tough for the stakeholders to make decisions
towards restocking. A comprehensive distribution system can help stakeholders to optimize
their time so that they can focus on enhancing their business operations.
Manipulation in Trade Schemes
In today’s competitive world it is essential to match the changing consumer demands and
ensure loyalty. BTL (Below-the-line) isone such subtle marketing approaches where no direct
customer is impacted which means that anyone can manipulate the controlling parameters
without the end customers knowing. Manipulation of cost estimates and misrepresentation of
transactions in accounting records are a repetitive event within marketing teams. There have
been evidences of invoices being inflated by the agencies, while the employees get benefits in

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the form of gifts. A proactive system is required which can counter the above challenges and
divert the marketing spends to focus on acquiring consumerinsights.
Dependency on the Reports
One thing that FMCG industry depends on is – Reports. This being a very competitive business,
the growth largely depends upon the speed and accuracy of the reports. Hence, the data
available with the executives plays a crucial part in making right business decisions.However,
the existing manual and monotonous procedures waste time and decrease the work
productivity. While large data is gathered at numerous touch points and varied influencing
factors, the structure lacks the ability to measure and deliver a valuable business insight. It is
crucial to have a DMS which is self-service one and can generate customisable reports on real
time basis. Such systems enable the stakeholdersto have access to the updated information
across category, product, region,DSRs at their fingertips instead of going through various
reports to make relevant decisions.

Since the success of any FMCG company mainly depends on the efficiency of marketing, sales
and inventory management teams,an effective Distribution Management System should
include intelligence from all these three teams.
Few questions that the FMCGs operating in domestic market should ask themselves:

 Is the growth in our top-line numbers genuine?

 Is our race to achieving targets compromising our integrity?
 Are we deriving maximum profits from our marketing spends?
Disruptive applications of technology hold the key to turnaround the entire distribution
structure of companies to create a system where implementing consumer feedback within the
product and putting this updated product back on the shelves,all within a fortnight, is
possible.The new age technology can help the companies become extremely responsive and
agile in terms of reacting to the market trends.

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 BIBLIOGRAPHY

1. www.google.com
2. https://www.optimizely.com
3. https://www.coursera.org/
4. www.udemy.com
5. www.investopedia.com
6. www.oraclesuit.com

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