Supply chain distribution refers to your methodology for getting products to consumers. With a formal distribution plan that’s implemented rigorously, you reduce cycle times for product deliveries. There are four main distribution channels that a company can choose when looking for ways to best market their products. Options include direct sales, wholesale, brokerage, and dual distribution. For best practices, carefully choose your supply chain distribution partners. There are also tools to help manage your distribution channels like supply chain management software programs.
Supply chain distribution is the way in which businesses get their products to customers. Distribution plans largely depend on the financial and company goals of the business. An organization may choose to sell products directly to their clients while others use third-parties for distribution purposes. In order to be successful, your supply chain distribution should be formalized through an organized plan.
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When creating the plan, the expectation is that companies will review the different distribution options open to them and choose the best option for their customer base and product line. Formal distribution plans reduce the cycle days between when a customer places an order to delivery. Supply Chain Management Review states that those who have an extensive distribution plan only take two days for order fulfillment. In comparison, those without a distribution plan take 10 days. Supply chain distribution is used to balance supply and demand. Your distribution plan should be able to handle any type of market changes, including supply disruptions and demand increases.
In supply chain management, you’ll often see the terms distribution and logistics used interchangeably. In reality, the two terms aren’t quite the same (and neither one quite accounts for the increasing importance of transportation marketing).
Logistics describes how products get from their origin point to the location at which customers buy them. It prioritizes efficient paths from warehouses and inventories to points of sale. It involves the following processes:
Supply chain distribution is logistics in practice. If logistics is the process of figuring out how products will get from the manufacturer to the point of sale, then distribution describes actually getting those products where they’re going.
For example, let’s say your warehouse facility produces 100 units of the item you sell per day, and a nearby department store has placed an order of 300 units. Logistics is the process of determining how to get those 300 units to the department store in a timely, cost-efficient fashion. Once you’ve nailed that down, distribution is the act of successfully getting the order to the department store. Distributing your product will involve inventory management, packaging and warehousing.
There are four main channels of distribution in the supply chain. Each distribution channel may work well for one type of business but falter for another.
Although there are four distribution channels, emerging technologies are changing the way products are getting to consumers.
The supply chain and distribution channel is not your daddy’s supply chain and distribution channel anymore.
In fact, today’s distribution chain is facing unprecedented changes that pose challenges and rewards to all participants in the supply and distribution trade.
Partners all along the “traditional” distribution and supply chain channel are being challenged by new entrants into supply and distribution markets across many industries. The waters have been muddied by the Internet and the introduction of consumers and end-users into supply chain distribution.
Successful distribution and supply chain management is characterized by a solid organization featuring a centralized hub supported by a satellite chain distributor. Picture it like the spokes of a wheel connected at the middle – the hub.
The “new” supply chain and distribution channel has several key components, which fall under the supply chain management “umbrella.” These components include:
Manage your plan from within your chain, not from above. If you use statistics and historical data, you are not getting the whole picture. Talk to your partners and understand their needs using the traditional one-on-one approach.
Whom do you trust to make you successful? The answer should be your distributor partner. Not only is that partner a known commodity, but they can also provide business in the growing global market. Your newest partner could be half a world away, thanks to globalization and the new global economy.
Technology has made supply chain management for distributors manageable and reliable. Supply chain management software helps in planning, projecting and implementing the chain of distribution.