Basic Errors in the Distribution ProcessAugust 27, 2021
The process of distributing a product is basically all a series of jobs that are quite complex. Many stakeholders are involved, not only producers or principals but also wholesalers, retailers, and the systems involved, then leaving traces of many basic errors in the distribution process. In its development, more and more companies are realizing that activities are not a simple process. The wider the scope of distribution, the more diverse the types of products, the new challenges must be faced every day. That’s why nowadays distribution support applications as one of the effective and efficient distribution solutions are also growing.
However, there are still some crucial issues that often occur and must be anticipated by the company so as not to have a significant impact on the business as a whole.
- Wrongly Identifying the Market
The market is the most important factor in every business, so is the distribution process. The difference is, the distribution is very dependent on the demographics of the target market, including the character of potential customers, age, preferences for products, and so on. In general, the locations of potential customers can be grouped in one area. The urban or rural target will determine how the distribution pattern is built.
The target market must also consider the individual, family, or corporate market. Of course, the corporate target market cannot be distributed through retailers or retailers. The pattern of treatment of producers/principals towards their target market must also be different. In conclusion, the company must be able to build a distribution pattern based on the target market.
- Not Controlling Salesforce Activity
Salesforce is the spearhead of distribution. However, there are still companies that do not control their activities optimally. For example, reporting is still manual, not integrated, and not real-time. As a result, reporting is not timely, management’s strategic decisions are often executed too late.
In addition, the salesforce will be burdened with many administrative tasks which end up consuming more time than doing their main task of market expansion.
The existence of digitizing salesforce will also increase sales accountability. All goods out and absorbed in retail or retailers can be well known.
- Does not control warehousing activities
Distribution companies that are now booming growing, there are still those who consider warehouses to be nothing more than temporary storage places for goods before they are distributed to wholesalers or retailers. In fact, warehousing is an important part of distribution activities. Stock management in the warehouse will affect the frequency of production, the scope of work of the salesforce, and even the fluctuations in product prices.
Warehouse operations also include budget requirements that must be issued by the company. Good management must know how long the optimal goods are in the warehouse because it involves budget requirements and the size of the next production. Another factor that cannot be missed is the selection of warehouse facilities, inventory placement, equipment placement, and storage functions within the warehouse itself.
If not managed professionally and using a technology-supported system, warehousing will actually cause many obstacles in the distribution process.
- Mistakes in Building a Supply Chain
It is basic knowledge that the longer the supply chain, the higher the product price because of the many channels that must be passed. Determining the distribution channel chain can affect the smoothness of sales which will ultimately have an impact on profit, capital, risk, and the effectiveness of the salesforce.
The supply chain is basically influenced by two things, the first is the type of goods and the second is the geographical location. Perishable goods (short shelf life) of course require shorter distribution channels to reach consumers. If the goods must be distributed to locations with geographical locations far from the factory, it will require greater warehousing costs and transportation costs which in turn will have an impact on the selling price.
Meanwhile, non-perishable goods tend to have a longer distribution pattern, as more companies or individuals want to be involved in seeking profit.
In this case, the role of the principal and distributor becomes very important because the management must conduct research and then determine what distribution chain is the most appropriate for its products. Of course, this also requires periodic evaluation.
Some management considerations in this topic are the nature of the goods, the nature of the distribution, alternative costs, available capital, levels, benefits, and the estimated number of requests.
With these aspects, the company can determine the length of the chain in the distribution channel that is considered the most appropriate. Companies that have complex distribution channels with many links make margins very thin so they risk rising selling prices which makes the product uncompetitive in the market.