An Overview of Supply Chain Distribution: Important Facts to Learn

Businesses get their goods to consumers through a process known as supply chain distribution. The company’s financial and operational objectives have a significant impact on distribution strategies. Some businesses choose to bypass middlemen and deal directly with consumers when selling their wares. A formalized distribution plan along the supply chain is essential to the success of any business. You can get the help of supply chain management consultants to create an organized distribution plan. The consultants at Group50 are experts in their fields with more than two decades of experience. You can contact Group50 for any consulting help.

In this article, the mentioned topics are covered:

• Channels of Distribution
• Role of Distribution
• Advantages of Distribution
• Challenges Faced During Distributio
• FAQs on Distribution
• Bottom Line

Channels of Distribution

1. Direct Sale: When manufacturers or companies sell their products to customers directly without any middlemen, wholesalers, or brokers involved, this is called direct sale. Goods with mid-price points are the ideal ones for direct sale, and they should also have an extra shelf life because companies might have to store a high quantity of goods.
2. Brokerage: Brokers are those who work between companies and retailers. They are responsible for sales and purchases only, and they do not take on the shipping responsibility of goods. For example, toy manufacturing companies can hire brokers to supply their goods to toy stores.
3. Wholesale: Wholesalers buy products in bulk and sell them to retailers or end customers. They buy products in bulk and add their margin of profit when they resell them to others. They also face some risk because they are responsible for the sales of the products, and if the sales are low, they will have to deal with the losses.
4. Dual Distribution: In this channel, companies can use more than one channel for the distribution of their products. For instance, they can sell products directly, hire a broker, and deal with wholesalers for product distribution. Franchises are another example of dual distribution.

Role of Distribution

Maintaining steady supply and demand requires a well-oiled supply network. Your distribution plan needs to be flexible enough to adapt to shifting market conditions, such as unexpected spikes in demand or shortages in supply. Distribution networks try to streamline the steps from manufacturing to selling by cutting out as many middlemen as possible. Supply chain consulting firm help companies achieve the goals of companies related to supply chain distribution. For instance, Group50 has some assessments for companies that help you understand how well your supply chain is, and then they will help you develop an organized roadmap for your company which can help you succeed.

Advantages of Distribution

1. Organization: Organized plans and systems are important in every business field. So, in distribution, if you have an organized supply or distribution plan, then things will run smoothly and you won’t have to face any sudden problems.
2. Inventory Monitoring: Maintaining a warehouse for stock takes extra manpower and time. With the help of distribution management software, you can easily keep track of your stock by seeing what is available in the warehouse, fulfilling customer orders quickly, and restocking as needed.
3. Reduce Cost: Outsourcing distribution management services can end up being cost-effective. These businesses offer specialized software for keeping tabs on finances, keeping track of sales, and managing stock. There will also be a reduction in labor expenses because fewer people will be needed to keep an eye on financial dealings or make computations by hand.
4. Accuracy: A sophisticated distribution management system helps companies get only what they need when they need it. As a result, neither customers nor businesses will be without the items they need most often.

Challenges Faced During Distribution

• Poor production cycles lead to unnecessary waste- When companies misjudge their supply, demand, or capacity, they risk having too much inventory on hand.
• Disgruntled vendors and consumers- When it comes down to it, satisfying customers is what SCM is all about. To do so successfully, it is necessary to set reasonable expectations while delivering a high-quality result.
• Products that have been lost in transit- Any delay caused by lost items at any stage of the supply chain is frustrating for customers.
• Elevated standards set by consumers- Customer expectations, especially in the face of new technologies and industries, can be difficult to manage and sometimes impossible to achieve without competent management.
• Supply chain stability despite unexpected disruptions- A supply chain’s optimal state is one in which it is ready for the unexpected and able to adapt quickly to new circumstances.

To solve these challenges, you can hire supply chain management consultants. They will assist you in predicting the possible risks and challenges and will provide you with solutions to the problems.

FAQs on Distribution

• How will goods go from their various origins to their various final resting places?
• Why is it important to have multiple channels of distribution?
• What does "downstream process" mean when referring to distribution?
• How do distribution channels help, and what are their benefits?
• What are the benefits of hiring supply chain management consultants?

Bottom Line

These points are very important to understand if you want successful supply chain distribution. A supply chain consulting firm will help you improve stock management and office workflow. Warehouse layout, stock control, demand prediction, supply chain management, and output scheduling are all areas covered by these consultative offerings. Group50’s consultants will assist you with the above-mentioned things and many more according to your business needs.

Group50.com is a top US based Global management consulting firm that helps businesses develop performance. Our Strategy Execution Consulting Services and Business Process Management Services quickly automate business growths & profitability.