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Basic Errors in the Distribution Process

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.

The Key to Success in Building a Distribution Business

The key to success in building a distribution business, management, and corporate governance are important weapons to win the competition. Not a few businesses have been significantly affected by the ongoing pandemic. But on the other hand, there are also businesses that recycle profits because of this pandemic. One of them is the logistics business. When human activities are limited, the need for home delivery becomes very crucial. Not surprisingly, the number of shipments of goods during the pandemic skyrocketed. Not only secondary and tertiary goods, even basic necessities including fast-moving consumer goods (FMCG) are very commonly purchased with the concept of home delivery.

The above conditions also encourage the growth of new business fields such as distribution. The need for speed and ease of arrival of goods on time makes new distributors appear. The scale of the business also varies, ranging from small, medium-scale, or expansion of large companies.

However, business competition should still be the concern of every businessman. The development of management and corporate governance is an important weapon to win the competition. Check out some tips for building a distribution business

  1. Conducting Market Research and Analysis Periodically

It is very important to do a lot of market research as a basis for making decisions before and while running a business. Research is not always in the form of paperwork which is heavy, but more to the observation of competitors, customer needs to new challenges that must be faced. The market is an important factor because the existence of a market will determine the direction of the product to be distributed later. If the market is right, then the product will be distributed to the right target as well. If this happens, then the product turnover will be smooth and a smooth business as well.

Good use of data is also part of market research and analysis. Data is the basis for decision-makers.

  1. Determining the Right Distribution Chain

The right distribution chain is the most crucial point in distributing goods. The simpler the distribution chain, the more efficient the business will be. A long and convoluted distribution chain will increase costs and add to the management work. Basically, distributors are the first hands to distribute products from producers to retailers or final consumers. Margin is generally obtained from price discounts from producers to final consumers. The more types and quantities of products distributed, the higher the discount.

Distributors must purchase products, store products, classify products to transport products to the final retailer. Even distribution companies include parties that can convey information about all things related to products and carry out product promotions.

All of these capabilities are applied to form a product distribution chain. In the end, the distribution chain is a series of activities that will ultimately be related to the whole process of distributing goods. The distribution chain is also defined as the activity of moving and distributing goods or services from producers to consumers. The chain includes various things ranging from the type, price, quantity, and place needed. Of course, the distribution chain can be different in each location and type of goods, this is what requires the attention of distributors.

Source: freepik.com

  1. Check Inventory Carefully

A good distributor must be able to guarantee the availability of stock in the warehouse, both in terms of quantity and quality. The existence of goods in the warehouse greatly determines the availability of market goods, which greatly determines the credibility of the brand. Delivery delays can make competitors’ products chosen by consumers, especially for fast-moving goods. On the other hand, the control of goods also involves the expiration date which greatly determines the quality of the product. delay in delivery that causes your item to expire. Create an inventory system with sufficient technology to find out the amount and need for goods in real-time.

  1. Monitoring Cash Flow

Financial management is basically a determinant of the success of any type of business. In the distribution business, this becomes very crucial because the payment system between distributors and retailers can be different for each product or manufacturer. Use of supporting technology It is very important that all invoices and receivables and other business obligations are complied with on time.

 

  1. Build a solid Salesforce.

It is undeniable that the sales force or sales force in the field is the cornerstone of the distribution of goods. They do not just bring goods to retail, but also build strategies and establish good relationships with retailers. The sales force is also required to be able to read market conditions, develop the market and make reports as the basis for making management decisions.

For this reason, the management of the sales force has always been an important element that management must concentrate on.

The sales force also needs to be supported by digital applications that make it free to move without being burdened by many complicated reports like other elements.

Appropriate, Fast, and Efficient Distribution Strategy

Fast-moving consumer goods (FMCG) companies need the right, fast, and efficient distribution strategy. Manufacturers need distribution so that products from producers can reach consumers safely. Although it looks simple, in reality, the process of the FMCG product journey from producer to consumer is complicated. Therefore, a good distribution strategy is needed so that the product reaches consumers well too.

The following strategies can be applied to make business activities more satisfying:

Choosing the right distributor

The first strategy, of course, is choosing the right distributor. Because the right distributor will work according to the target even the vision and mission of the manufacturer. Choosing a distributor that fits the producer’s target market will make the producer’s job easier. Manufacturers only need to submit the product to the distributor, to be further managed by the distributor.

Using supporting software

Doing distribution, especially on a large scale, there is a possibility that producer companies will experience problems in managing the process. Software like enterprise resource planning (ERP) or Scylla Enterprise will make monitoring easier. This business software can help manage the distribution process more effectively and efficiently. The way it works is to connect related divisions. This software also integrates a reporting system. Distribution and all the processes can run smoothly, safely, and accurately.

Distribution via website

One of the facilities in the digital era is the existence of a website. Websites can be used for product distribution. The trick is to include all the products in your company on a website that you develop yourself or through a third party. Take advantage of SEO techniques. Use SEO services for several months so that your product is easy to find on search engines. Please note, the level of competition in search engines is tight because it competes with products offered in the marketplace. Therefore, when there is a new product, do intensive SEO optimization.

Define distribution area

As a manufacturer, you must determine the right distribution area according to the company’s products. Understand the behavior of your consumers and map where they are. Do a survey so you know which areas have the most demand for your product. Start in the nearest area and focus on the local area. After the local area has been met, then you can expand the distribution area.

Prepare the means of transportation

One of the main factors for successful distribution is the availability of adequate means of transportation. You have to determine the right means of transportation. Adjust to the location of the distribution range and calculate the cost. Choosing the right means of transportation will make distribution smoother and costs less.

Maintain good relationships with distributors

It could be said, the distributor is the most decisive party in your business. It’s useless to have a quality product that many people need if it can’t be distributed properly. Therefore, maintain good relations with distributors. Especially if you have got the right and appropriate distributor. Keep in touch. Report daily work changes and progress.

Those are some of the right distribution strategies, to optimize the delivery of your products to consumers. Don’t forget to evaluate the sales results and performance of distributors on a regular basis. The goal is to find out how far your business has grown while working with the selected distributor. Also, to determine the next step in selecting a more effective distribution strategy.