There’s nothing worse than missing a delivery deadline. You don’t realize there will be an issue until it is too late and now your customer’s trust in you is broken.
In the intricate web of bringing products from manufacturers to customers, the process of product distribution plays a pivotal role.Â
Understanding the channels of distribution and the various types of distribution strategies is essential for any business looking to thrive in the competitive market. Moreover, the role of distributors and other key players in the distribution network cannot be overstated.Â
Let’s delve into the basics of product distribution and explore why effective distribution management is crucial.
What Is Product Distribution?
This is the process in your project management where you oversee the movement of goods from manufacturer to customer. There are many steps and moving parts in this process including managing materials, packaging, warehousing, inventory, supply chain, logistics, and more!Â
4 Different Channels Of DistributionÂ
There are four different types of distribution channels, ranging from simple to complex.Â
Level Zero
The most straightforward and simple channel involves a direct exchange between the manufacturer and the customer.
Level One
Now at this level, you begin to add middlemen. This channel involves the manufacturer, distributor, and customer.
Level Two
Level two equals two middlemen. Now it involves the manufacturer, distributor, retailer/wholesaler, and customer.
Level Three
Finally, this is level three where you add an agent or broker and they work for the wholesaler. The order is now the manufacturer, distributor, retailer, agent, and then the customer.
Types Of DistributionÂ
There are three types of distribution strategies. Deciding which one you want to be a part of will be dependent on how you want to position yourself in the market.
Intensive
This is when you try to get as much of the market as possible. You want to have as many outlets as possible with no cap on the stores or locations you sell from.
SelectiveÂ
Now you begin becoming more selective with your distributors, hence the name. You are deliberate with the locations you choose and only have a limited amount of stores. This allows you to target your ideal customer.
ExclusiveÂ
Now you become a little more exclusive. You only partner with other high-end and exclusive brands limiting your outlets. You become more particular with your locations to cater to your brand and can charge a bit more.
Breaking Down Distributor Profiles
Understanding the different types of distributors and their roles allows you to understand how you can work together more efficiently.
Distributor
A distributor is a wholesaler that goes beyond just fulfilling orders and delivering them and takes responsibility for the sales and marketing of the manufacturer.
This includes tasks such as managing orders, handling returns, and serving as a sales representative. Beyond that, they also have to keep up with the market constantly monitoring changes.
Retailer
Retailers, both brick-and-mortar and online, act as the final point of purchase for customers. They source products from distributors and manufacturers.
WholesalerÂ
As middlemen, wholesalers fulfill orders for retailers by purchasing from manufacturers in bulk at a lower cost. They then sell these products in smaller quantities at a higher price.
Agent
Agents facilitate the logistics of sales, handling contracts, marketing, and specialized shipments. They serve as the face of the sale for the manufacturer, managing relationships with customers.
Why Is Distribution Management Important?Â
Effective distribution management is vital for several reasons.
- Efficiency: Streamlining the distribution process ensures that products reach customers in a timely and cost-effective manner.
- Customer Satisfaction: Well-managed distribution leads to reliable product availability, contributing to customer satisfaction and loyalty.
- Market Reach: A strategic distribution network enables businesses to expand their market reach and tap into new opportunities.
- Increase Sales: When your management is optimized you can streamline your business faster and increase sales.
- Cost Control: Efficient management helps control distribution costs, optimizing the balance between investment and return.
- Adaptability: Monitoring market changes and consumer trends allows for quick adjustments in distribution strategies, keeping the business agile.
So what can you do to improve your distribution management?
Factors That Influence Distribution ManagementÂ
There are several factors that impact the success of distribution management.
Geography
The geographical spread of the target market influences the choice of distribution channels. Where your customers are may affect where you have warehouses and team members available.Â
Product Nature
The characteristics of the product, such as fragility, affect the choice of distribution strategy. Heavy and large products require more space in storage and bigger delivery trucks.
CompetitionÂ
Understanding the competitive landscape helps in positioning products effectively within the market.
Regulations
Adhering to local and international regulations is crucial for seamless distribution operations. From confirming your manufacturer has been cleared to ensuring you follow all delivery requirements, it is important to comply with requirements so you do not have to pay any fines.
TechnologyÂ
Embracing technological advancements can enhance the efficiency of your distribution processes. It can help you have full visibility of the entire process to limit bottlenecks and see possible delays before they occur.Â
Buyers
The buyer’s purchasing habits and requirements heavily affect your distribution management. There will be highs and lows of customers purchasing and you need to be able to predict them and be prepared.Â
Partners
When you decide to not take everything in-house and outsource your manufacturing your reputation becomes tied to theirs. Be aware of who your competitors are using and the reputation of potential partners so you can make a strategic decision.Â
Then it is crucial to maintain a strong relationship and communication.Â
Improve Your Distribution Management With Khameleon
Looking to optimize your product distribution and start delivering under budget and on time?
Dealerships and integrators are part of the level two distribution channel and act as the distributor. While you do not have to deal with manufacturing the products you do have to manage your warehouse as well as vendor and customer relationships.Â
As a made-to-order project-based business your distribution management has to be on point or you can easily fall behind.Â
But don’t worry we are here to help! Both our Khameleon Enterprise and Khameleon Professional cloud-based subscription models include features that support order management and product distribution.
Our CRM integrations allow you to maintain strong communication with your partners who are involved in the distribution channel as well as customers. So you know if you will be able to fill your customers’ orders and keep everyone in the know.
See the power of Khameleon for yourself, request a free demo today!