Understanding distribution management is important if your business regularly moves goods from one place to another.
What is distribution management?
Distribution management monitors the movement of goods from a supplier or manufacturer to the end consumer. Focusing on order fulfilment, distribution management helps your business deliver goods on time and in optimal condition.
Why is distribution management important?
An efficient distribution management system is important because it can give you an edge over your competitors. It also helps you build your brand’s reputation by meeting customers’ expectations. By better monitoring your distribution channels, you can minimise errors, lower shipping costs, deliver faster and increase customer satisfaction.
Distribution channels
Distribution channels are the pathways a business uses to get its goods or services to end consumers. Organisations generally use wholesale, retail, distributor or ecommerce distribution channels.
Wholesale
At the top of the distribution chain are wholesalers who sell to retailers and other businesses. If this is your distribution model, you’ll sell products in bulk.
Retail
A retail distribution model may involve the business selling directly to their customers. If the business sells goods, it may manufacture them themselves. Alternatively, the business may buy stock in bulk from a wholesaler or manufacturer to sell on to their customers.
Distributor
A distributor works with manufacturers and producers and may sell goods to wholesalers, retailers or direct to consumers. They can manage the distribution process for these businesses.
Ecommerce
If you’re an ecommerce business, you may be selling direct to consumer. Your distribution model will oversee the logistics of moving finished goods from the warehouse to the end customers.
How does distribution management work?
Distribution management involves the following activities for distributors, wholesalers and retailers:
Receiving inventory
When receiving inventory, ensure what’s delivered matches the order. When goods arrive at a warehouse or fulfilment centre, they’re unloaded, processed and stored.
Warehousing inventory
Warehousing inventory plays a key role in the supply chain. Warehouse teams make sure your items are stored correctly. They also monitor stock levels and ensure that warehouse management is as efficient as possible.
Packing orders
Packing orders involves selecting the correct items and order quantities off the warehouse shelves. You’ll then securely package them so they arrive undamaged.
Shipping
Shipping is the last step before your items reach the buyer. A good shipping process helps you deliver your products fast and cost-effectively.
Tip: Use inventory distribution software like MYOB Acumatica. An end-to-end solution, the software works across complex, multi-site inventory, giving you better visibility over your distribution process.
System-wide inventory control means you’ll easily manage stock across warehouses, detect dead stock and automate processes to keep items moving. Support your picking and packing team with dashboards customised to each role.
Advantages of distribution management
There are many advantages to putting a distribution management system in place. These include:
Lowered costs
You can lower costs and increase profitability by adopting a distribution management strategy and monitoring your products’ movements as they travel through a distribution channel. This oversight helps you identify weak areas and optimise efficiencies.
Increased customer satisfaction
You can increase customer satisfaction by making sure you consistently deliver goods intact and on time.
Better organisation
Having control over your inventory and distribution lets your business stay organised, better meet customer needs and position itself for expansion into new markets.
Reduced errors
By overseeing the distribution process from end to end, you can reduce the likelihood of any delivery errors negatively impacting the customer experience.
Challenges of distribution management
Distribution management isn’t always easy. Some of the challenges that businesses encounter include:
Shipment delays
Shipping delays can easily disrupt a distribution channel. Bad weather, mechanical faults and traffic congestion are some issues that can affect your ability to deliver goods to your customers on time.
Supply chain shortages
Supply chain shortages occur when there isn’t enough of your product, parts or raw materials to meet demand. Perhaps materials are suddenly scarce, or you’ve had a huge and unexpected increase in customer demand.
Unpredictable events
Unpredictable events like natural disasters, worker strikes or geopolitical issues can all affect your distribution channels.
Tip: Use inventory distribution software like MYOB Acumatica to help you get ahead of these issues.
Connected to the rest of your business, MYOB Acumatica has rich, real-time data to improve demand forecasting and help you manage complex multi-site inventory.The CRM also makes it easier to keep customers informed with easy access to inventory data and delivery timelines.
Distribution management FAQs
What is the difference between distribution management and logistics?
There’s a difference between distribution management and logistics. Distribution management helps you make sure there are always items to sell to customers. Logistics focuses on how you’ll store and transport your goods to its final destination.
What is the difference between distribution management and supply chain management?
The difference between distribution management and supply chain management is in what they do. Distribution management monitors the movement of goods from a supplier or manufacturer to the end customer. Supply chain management factors in all the activities required, from sourcing raw materials to delivery of the finished product.
What are the different types of distribution strategies?
The different types of distribution strategies include:
Direct distribution – selling your products or services direct to customers. For example, a customer can purchase your product from your website, brick-and-mortar shop or mobile app.
Indirect distribution – selling and distributing items through wholesalers, third-party resellers or other intermediaries.
Intensive distribution – used for high-availability items like fast-moving consumer goods or when you want to distribute your items to as many sales outlets as possible.
Selective distribution – this strategy lets you distribute to multiple sales outlets but retain control over which stores or locations carry your items.
Exclusive distribution – often used for luxury or premium goods, this strategy focuses on distribution via limited sales outlets.
Dual distribution – a combination of direct and indirect distribution strategies; this approach lets you sell through retailers or wholesalers and sell directly to consumers.
Goods in, goods out: faster
A good distribution management strategy is one of the main contributors to your overall business success. Maintaining fast and efficient inventory distribution is essential to delivering the best possible customer experience.
MYOB Acumatica can help you unlock better supply chain visibility to minimise errors, reduce costs and plan for business expansion and growth.
Learn how MYOB can help you optimise your distribution management – talk to an expert.
Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.