The distribution process of a product is a whole series of complex tasks. Many stakeholders are involved, not only manufacturers or principals but also wholesalers, retailers and the systems involved. In its development, more and more companies realize that activities are not a simple process. The broader the scope of distribution, the more diverse the types of products and the various new challenges that must be faced every day. That is why distribution support applications are growing as an effective and efficient distribution solution to handle basic errors in the distribution process.
However, some crucial issues often occur and must be anticipated by companies to avoid significant consequences for the business. The following are the basic mistakes in the distribution process that commonly occur in businesses.
- Misidentifying the Market
The market is the most important factor in any business, and distribution is no different. The difference is that distribution highly depends on the target market's demographics, including the character of potential customers, age, preference for products, etc. In general, the location of potential customers can be clustered in one area. Urban or rural targets determine how the distribution pattern is built.
The target market must also consider individual, family or corporate markets. 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 market it is targeting.
- Not Controlling Salesforce Activities
Salesforce is the spearhead of distribution. However, it is still expected to find companies that have not controlled their activities optimally. For example, reporting is still manual, not integrated and not real-time. As a result of untimely reporting, strategic management decisions are often executed late.
In addition, the salesforce will be burdened with many administrative tasks that consume more time than their main task of market expansion.
The digitization of salesforce will also increase sales accountability. All outgoing and absorbed goods in retail or retailers are well known.
- Does not control warehousing activities
Some distribution companies still consider warehouses temporary storage places for goods before being distributed to wholesalers or retailers. Warehousing is an important part of distribution activities. Stock arrangements in the warehouse will affect the production frequency, the scope of salesforce work, and even product prices.
Warehouse operations also include the budget requirements that the company must spend. Good management must know how long the optimal goods are in the warehouse because it involves budget needs and the size of the next production. Other factors that cannot be missed are 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 cause many distribution problems.
- Supply Chain Building Mistakes
It is basic knowledge that the longer the supply chain, the higher the product price because of the number of channels that must be passed. Determining the chain of distribution channels can affect the smoothness of sales, ultimately impacting profit, capital, risk, and salesforce effectiveness.
Two things influence the supply chain: the type of goods and the geographical location. Perishable goods require shorter distribution channels to reach consumers. If the goods must be distributed to an area with a geographical location far from the factory, greater warehousing and transportation costs will be required, which ultimately impact the selling price.
Meanwhile, non-perishable goods tend to have longer distribution patterns, as more companies or individuals want to be involved to make a profit.
In this case, the role of principals and distributors becomes crucial because their management must research and determine the most appropriate distribution chain for their products. Of course, this also requires regular evaluation.
Some of the management considerations in this topic are the nature of the goods, distribution, cost alternatives, available capital, level of profit, and estimated demand.
With these aspects, the company can determine the length of the chain in the distribution channel that is considered most appropriate. Companies with complex distribution channels and many links make margins very thin, which risks increasing selling prices and making products uncompetitive in the market.
