Distribution management

Introduction

Distribution management is the process used to inspect the movement of goods from supplier to manufacturer to wholesaler or retailer and finally to the end consumer. Numerous activities and operations that include raw goods vendor management, packaging, warehousing, inventory, supply chain, logistics, and blockchain are involved in this process.

Why Is Distribution Management Important? 

Distribution management is critical to organizing and getting goods to the buyer promptly and with the least amount of time. Therefore, it has a direct impact on organizational profits.

What Is a Distribution Network and What Are the Benefits?

A distribution network is a connected group of storage facilities and transportation systems. Established by a distribution strategy designed to move goods from manufacturers to wholesalers, retailers, or buyers. 

Advantages of Distribution Management 

Besides delivering higher profits, distribution management eliminates waste in several ways, ranging from reduced spoilage to reduced warehousing costs since products and goods can be delivered as needed (“just in time” inventory) rather than stored in massive bulk (“just in case” inventory). 

Distribution management leads to decreased shipping charges and faster delivery to customers, and it also makes things easier for buyers as it enables “one-stop shopping” and other conveniences and rewards, such as customer loyalty rewards programs. 

Distribution Management Challenges 

• Distribution challenges can arise from a variety of disruptions. Natural disruptions include severe weather events, raw material shortages (Bad crop years), pest damages, and epidemics or pandemics.

• Human interference includes riots, protests, wars, and strikes. 

• Transportation disruptions include vehicle disrepair, maintenance downtimes, accidents, delayed flights, and restrictive or new transportation regulations such as those regularly seen in trucking. 

• Economic challenges include recessions, depressions, sudden drops or increases in consumer or market demands, new or changes in fees or compliance costs, changes in currency exchange values, and payment issues. 

• Product disruptions include product recalls, packaging issues, and quality control issues. Buyer disruptions include order changes, shipment address changes, and product returns.

Factors That Influence Distribution Management

Many things can influence distribution management. The five most common are:

• Unit perishability – if the product is perishable, then time is of the essence to prevent loss.

• Buyer purchasing habits – Peaks and troughs in purchasing habits can influence distribution patterns.

• Buyer requirements — Changes in a retailer’s or manufacturer’s just-in-time inventory demands,

• Product mix forecasting – Optimal product mixes vary according to seasons and weather or other factors and

• Truckload optimization – Relies on logistics and fleet management software to ensure every truck is loaded and routed according to the most efficient path.

Choosing a Distribution Management System

Choosing the right distribution management system for your organization depends on your organization’s distribution goals, challenges, and the distribution models and channels your company uses. But as a general rule, companies should evaluate: 

• Ease of integration and compatibility with legacy systems.

• Scalability and elasticity

• Security

• Data management and analytics, including real-time data streaming and ecosystem data-sharing

• Adaptability, whether the system is agile enough to accommodate the rapid changes needed to overcome obstacles or seize new opportunities

 Elements of Distribution Management

The elements of distribution management systems are the steps involved in getting the product from the manufacturer to the end customer: example, supply chain, blockchain, logistics, a purchase order and invoicing system, vendor relationship management (VRM), customer relationship management (CRM), an inventory management system (IMS), a warehouse management system (WMS) and a transportation management system (TMS).

GS1 is a global non-profit organization that develops and maintains standards for supply chain management, including distribution. These standards are widely used to ensure efficiency, accuracy, and consistency in various aspects of distribution management. Here are some key GS1 standards relevant to distribution:

1. Product Identification: GS1 standards facilitate unique identification of products using Global Trade Item Numbers (GTINs), which are encoded in barcodes. This ensures accurate tracking and traceability throughout the distribution process.

2. Barcoding and Labeling: GS1 barcodes enable automated data capture, allowing for faster and error-free handling of goods in warehouses and during transit. This includes information like batch/lot numbers, expiration dates, and serial numbers.

3. Data Synchronization: GS1 standards enable the synchronization of product data across the supply chain. This ensures that all parties involved have access to accurate and updated information, reducing discrepancies and errors.

4. EDI (Electronic Data Interchange): GS1 EDI standards facilitate electronic communication between trading partners, allowing for seamless exchange of documents such as purchase orders, invoices, and shipping notices.

5. Traceability and Recalls: With GS1 standards, companies can quickly trace products through the supply chain in case of recalls or quality issues, ensuring swift and targeted action to mitigate risks and protect consumers.

6. EPCIS (Electronic Product Code Information Services): This standard enables real-time visibility and sharing of event-based information about the movement and status of products throughout the supply chain.

7. Implementing GS1 standards in distribution management enhances efficiency, accuracy, and transparency across the supply chain, leading to cost savings, improved customer service, and better compliance with regulatory requirements.

GS1 standards endorsed by GS1 Kenya provide a foundation for enhanced data accuracy and integrity. GS1 Kenya’s advocacy for the adoption of GS1 standards in distribution management not only aligns businesses with global best practices but also positions them to thrive in a data-driven marketplace. Through collaborative efforts with industry stakeholders, GS1 Kenya is instrumental in fostering a business environment where standardized processes drive efficiency, visibility, and sustainability across the entire supply chain ecosystem.