Supply chain managers have multiple challenges in today’s business environment. They are dealing with complex emerging markets, for one thing. Companies may be dealing with large distribution networks. In some instances, there may be millions of outlets carrying products. These can easily represent billions of potential transactions taking place 24 hours a day, seven days a week. It should not come as much of a surprise that up to 21% of supply chain professionals surveyed by Statista said their biggest organizational challenge is visibility (2018).
Many manufacturers struggle to manage everything with limited data and insight into the market. They need to take control, and they need that control to be easy. That’s where distribution management software systems come in, integrating and automating business processes in one central place to streamline the business.
Definition of Distribution Management
To understand why you might want to consider adding distribution management software, first you need to understand what distribution management itself is—especially if you’re not already practicing it. Distribution management is typically defined as a process used to oversee the movement of products from supplier to manufacturer to wholesaler or retailer, and finally on to the end consumer. There are multiple activities and processes involved in this, such as raw goods vendor management, packaging, warehousing, inventory, supply chain, and logistics.
There are four channels of distribution:
- Wholesaler: Products are distributed from manufacturers to wholesalers.
- Retailer: Products are distributed from the manufacturer or wholesaler to retailers.
- Distributor: Products are moved from the source or manufacturer to an authorized distributor.
- Ecommerce: Products and services are represented online and distributed directly to the buyer. This is the most disruptive distribution channel.
Ecommerce is the newest of the distribution channels. It has produced rapid changes, forcing distributors to rethink their traditional strategies.
What is Logistics v. Distribution?
Despite some surface similarities, distribution and logistics are not the same. Logistics involve the detailed planning and processes for effective supply and transportation of goods. With logistics including things like supply management, delivery routing, shipment tracking, and warehousing, one might think of logistics as physical distribution.
On the other hand, distribution might be more easily understood as commercial or sales distribution. It focuses on order fulfillment throughout distribution channels—the chain of agents a product moves through on its way to a consumer. Distribution management focuses on organizing all the steps involved in getting goods to a buyer on time and with minimal waste, which means it has a direct impact on profit, too.
Why Distribution Management Matters
Distribution management delivers higher profits, which may be reason enough for some companies to implement it. Additionally, it eliminates waste by reducing spoilage through “just in time” inventory, cutting warehousing costs over the bulk buy “just in case” approach. Its “one stop shopping” buyer convenience helps decrease shipping charges and enables faster delivery.
While distribution is a profitable step, it does have its challenges due to disruptions. Common disruptions include natural (weather, raw material shortage, pandemics), human (war, protests, riots, strikes), transportation (vehicle disrepair or accident, delayed flights, new regulations), economic (recessions, depressions, currency exchange values), product (recalls, packaging, quality control), and buyer disruptions (order changes, shipment address changes, returns).
How to Choose the Right Distribution Management Software
There are multiple distribution management software systems available today on the market, as varied as the businesses using them. Start by outlining your business’ distribution goals and potential challenges, including the models and channels your company already uses. As you begin evaluating solutions for the best fit, look for ones that also offer:
- Integration and compatibility with existing systems
- Scalability and flexibility
- Data management and analytics with real-time streaming and ecosystem data-sharing
- An adaptable system that is agile enough to accommodate rapid changes as necessary to overcome obstacles or chase new opportunities.
No matter what distribution channels or processes you use in your business, having distribution management software gives you the tools you need to manage it all. Enable maximum control and flexibility over operations and inventory, manage single and multi-site domestic and international operations, and maintain operational efficiency for success.
Choose the Right Software Provider
ASI has been working with business clients and helping them to solve their toughest issues for more than 30 years. We can help you find a custom solution that will fit your needs and your budget. Contact us today for your free accounting and Acumatica Cloud ERP software solution.