The major problem with supply chain interruptions can be that they are caused by many factors. These include damaged product delivery, manufacturing delays, order delivery delay or an unexpected event. While some of these things cannot be controlled for- like damage during shipment – there are several other options which should not happen if your distribution management is efficient and you maintain a tight inventory flow from manufacturer to retailer to end user. Especially given the increasing popularity of omni-channel retailing (where products can be purchased through any number of channels), it has become necessary to have complete control over its hierarchical and complex distribution ecosystem in order for all levels to function as efficiently as possible. Here we will discuss what this means, how it works and how 3PL partners might help you improve your system’s efficiency when managing distributions between store locations at various levels within the hierarchy – whether regional or global in scale.
Distribution management consists of monitoring the movement of finished products from the manufacturer or supplier to end users. One way it can help is by improving order fulfillment processes and inventory turnover, both resulting in increased profit margins and supply chain agility. Ultimately, well-executed distribution management increases customer satisfaction as well!
Importance Of Distribution Management For E-Commerce?
Distribution management handles inventory flow throughout the supply chain. In order for it to be efficient, distribution management will affect both your company’s profit margin and its growth rate. For example, if you spend too much on storage while there is an abundance of product that could have been sold- but wasn’t because there was no space – then you may accumulate too much dead stock which in turn affects your turnover rate (rate at which a business turns over their assets). If not replenishing inventory can cause lost sales as people will probably buy something else due to lack of availability if it exceeds the deadline set by yourself or suppliers. When executed well, distribution management can be one of the smartest ways to ensure:
- Inventory is effectively allocated and reaches customers in the fastest and most efficient way.
- There is enough inventory to meet demand while optimizing storage costs.
- Businesses have sufficient visibility to make improvements and take informed decisions.
There are four key channels of distribution management:
- Wholesalers: Wholesalers provide raw materials or finished products in bulk at low prices. Some examples of wholesalers are those who sell to manufacturers and sellers, distributors, retailers and so on. They often deal with distribution duties for the production of raw materials used for finishing goods.
- Distributor: Distributors are intermediaries who sell products from manufacturers to wholesalers or retailers. When a manufacturer wants to expand their distribution and reach, they can authorize distributors (from the local market) to distribute their goods. Usually these distributors also provide warehousing and logistics support given that they have close ties with the locals in terms of sales.
- Retailers: Choosing to work directly with wholesalers or manufacturers, retailers distribute products from different suppliers through different channels. For example, Carrefour sources and sells different brands of product in their physical stores and online.
- E-commerce: Online shopping has made modern direct-to-consumer brands possible, which deliver products to end users (in the user’s chosen location – home or office). Online retailers work with manufacturers and suppliers to order inventory and store it in warehouses. Once an order is placed, items are picked and packed from the available stock of goods at the warehouse under their own name. E-commerce compliance has removed middlemen from distribution processes, providing faster delivery cycles as well as more affordable prices for consumers with better customer service options.
How E-commerce Distribution Management Works?
Understanding inventory movements throughout a supply chain isn’t as simple as it seems. All the activities that happen during distribution management are critical, let’s take a closer look at what’s been going on with these things throughout the process.
When your e-commerce inventory arrives at the warehouse or fulfillment center, it will be unloaded, processed and stored. A thorough warehousing receiving process is important for efficient supply chain setup as well as an accurate accounting of inventory. Without proper procedures in place to count your products delivered by the manufacturer with those ordered from you, you may find yourself facing poor accuracy or lack of accurate reporting for profit margins and quality control.
It’s very important to monitor your inventory so that you know when it starts getting low. This is called warehouse management. The rise of digital warehousing has made it standard to implement a system called the warehouse management system (WMS), which simplifies various processes in the warehouse, like inventory and its distribution. It also reduces manual labor, allowing more attention paid towards speed without compromising accuracy.
After all the items in a single order have been picked, packing begins. Packaging involves putting together the right products with appropriate packaging materials into appropriately sized containers to ensure delivery of your item intact and undamaged.
Shipping:This is the final step of the process where goods are shipped to their destination. For direct-to-consumer brands, it’s most likely going to be delivered directly to you, but some companies also provide B2B e-commerce services and deliver goods for another company. E commerce delivery plays a key role in customer satisfaction; having an appropriate shipping strategy ensures competitive and profitable shipping options for customers that suits your business needs.
Benefits of Distribution Management System
- Fulfill Orders As Soon As Possible – When you’ve just started out, in-house fulfillment can be managed because the number of orders to be fulfilled is small. But as you grow, adopting multi-channel distribution becomes vital in order to remain competitive and attract more customers. There are two components that can speed up the fulfillment process effectively: technology and location.
- Technology can help greatly improve the fulfillment process. Having the right technology stack can also improve inventory visibility across the distribution network, so you can better respond to unexpected situations and make better business decisions.
- Location is another important component that helps in improving the fulfillment process. Choosing warehouse and distribution centers closer to your customers and closer to major ports saves time and optimizes transportation by reducing costs and speeding up transportation time.
- Meeting Customer Expectations: A distribution management system is essential to consistently meet customer expectations. With technology, orders can be delivered reliably and quickly over and over again with the right cost. This also ensures an available stock for each channel of sales as well as a shortened time for delivery so that customers are not waiting too long before receiving their product. At the same time, it keeps order fulfillment costs low so retailers can pass on savings to customers without increasing prices too much.
- Handling Market Seasonality: Seasonal brands should consider the role of distribution in relation to seasonality. Depending on the type of product you sell, it can play a significant role in your business’s growth. The “seasonal” nature of these products will generate different demands depending on their popularity and demand level at that time. If handled properly, proper distribution management can support seasonal brands by collecting historical sales data and determining how much inventory is needed for specific periods (called forecasted demand). For example: adjusting inventory levels accordingly or allocating stock based off where there are expected to be higher than usual levels of sales during any given period might help.
- Better Analysis Of Distribution Management Data: To improve and optimize your distribution network, you need a system that can analyze data about the supply chain. By optimizing inventory turnover, warehouse allocation and current SKU-level inventory at each location, you will be able to gain insights into how to better allocate products. By collecting this data over time with our Network Optimization solution, you’ll be able to find out where changes are needed in order for your company’s process flow – whether it is items being sent back or forward within the chain – so as not affect fulfillment operations.
- Increase Profit Margins: The best way to reduce operating expenses is by understanding our distribution strategy. This will help us optimize costs and ultimately save money. You can also save shipping costs during meetings by simply using more locations to store inventory from a 3PL (third party logistics) company.
- Faster Delivery: By having a well-defined distribution system, you will be able to offer better shipping options and incentives to your customers – which in turn means that they can enjoy higher customer satisfaction at lower cost.
How ProConnect Integrated Logistics Can Help?
ProConnect Integrated Logistics is a 3PL service provider with expertise, infrastructure and technology system that provides best-in-class distribution management for your business. Our warehousing, fulfillment and distribution systems help with inventory receiving, real-time tracking, faster fulfillment TAT and shipping. By choosing us as your logistics partner, you can rely on our vast network, warehouse infrastructure, robust WMS and top class customer service – that would in turn help you improve your supply chain efficiency.
To know more about how we can help, drop in your enquiry.