Distribution Management: Definition, Advantages, And How It Works

By Team TranZact | Published on Nov 4, 2023

Distribution Management is one of the most important factors in running a business. It involves the movement of products from where they are manufactured to the place where people can purchase them. If you want to increase the profit of your business, then you have to focus on sales and distribution management. In this article, we will try to understand Distribution Management, its advantages and importance, and its challenges.

What Is Distribution Management?

Distribution Management is the plan of how to move the products from where they are made to where they are sold. It also includes the management of raw materials, warehousing, inventory management, etc. Efficient Distribution Management can increase the credibility of your company and generate more revenue. It is so because customers can buy your products easily, which helps in increasing your sales.

Understanding Distribution Management

Do you still have a problem understanding what is distribution management? Let’s use examples for better understanding. Imagine a company that makes bulbs. They have to ensure that their bulbs reach all the stores from where people can buy them with ease. The plan to get their bulbs in all the stores is Distribution Management. It involves decisions like which transportation to use, how many bulbs to send to each store, and when to send it.

What Is a Distributor?

Distributors help to get the products from the manufacturer to the places where people want to buy them. For example, if you are a book publisher, then you can use distributors to send books to bookstores all over the country. Businesses have distributors in every area so that their products can reach everywhere.

Distribution vs. Logistics

Distribution Management and logistics are related, but there is a slight difference. Logistics is about getting the product to the right places. Distribution is a part of logistics. Logistics is the broader process that includes everything from getting materials to making products and then distributing them. You can think of it as the physical distribution management that helps to manage the supply chain. It can include raw materials, equipment, and other important things that are involved in the production and distribution of products. To reach the common people, the product has to go from the manufacturer to the storage unit, from where it goes to the distributor and from there to the retailer. The management of this process is distribution.

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Advantages of a Distribution Management Strategy

An efficient distribution management strategy is required to run your business smoothly, prevent losses, and make a profit. Let us see some advantages of having a distribution management strategy.

Save Money: Good Distribution Management can help you save money by choosing the best ways to move your products without wasting time and resources.
Faster Delivery: Distribution Management can make sure that your products get to the customers quickly to make them happy with your service. It is like ordering a pizza that arrives at your door hot and right on time, which makes you happy and satisfied with the service.
Ensures Availability: Distribution Management ensures that your products are available wherever and whenever customers want them.

What Is a Distribution Network and What Are the Benefits?

A distribution network is established by combining all the groups involved in Distribution Management. Let us see its benefits to understand this more clearly.

It makes sure products move efficiently from the manufacturer to the end customer.
It helps reduce transportation costs by choosing the best routes and vehicles.
Customers receive products faster because many people are involved in product delivery.
It allows better inventory management.
Companies can enter new markets and reach a broader customer base.
Distribution networks collect data for better decision-making.

Why Is Distribution Management Important?

The Distribution Management system ensures the availability of products when customers need them. If you want to increase the sales of your product, then you have to make efficient strategies for distribution management in marketing. Imagine that you want a new phone, but it took months to reach your local store because of poor distribution. In this situation, you may buy a different phone that is available, which will decrease the sales of the phone that you want to buy.

Distribution Management Challenges

Distribution Management is a well-organized plan for transporting products from one place to another, but there are several challenges.

If the truck or other vehicle carrying the product meets with an accident, distribution may be affected.
Sometimes, products get damaged during loading or packing, which also affects Distribution Management.
Product delivery may also be difficult in bad weather conditions, especially when it is raining heavily or snowing.
If protests are happening on the roads, then it will also disturb the delivery of your products.
When customers want different things all the time, it can be difficult to fulfil demand all the time.
Managing the logistics of getting products to customers on time can be difficult.

Factors That Influence Distribution Management

Many factors can influence Distribution Management, which need to be handled with effective strategies. We will explore some factors for you to have a better understanding.

1. Types of products:

The different product needs a different approach for transporting. For instance, shipping fresh fruits is not the same as shipping electronic items. Some products are fragile and need special care, while others are strong and can handle tough situations.

2. Customer need and demand:

The demand for products can be reduced or increased according to customer's needs, which can affect Distribution Management.

3. Transporting vehicles:

Businesses need to pick the right trucks, ships, or planes to transport their products to save transportation costs.

4. Technology:

Technology can help Distribution Management be more efficient. Businesses can use technology to track their products and plan the best routes for transporting.

5. Distance:

How far products need to be transported is a big factor in Distribution Management. Longer distances can be more challenging and costly to manage.

Distribution Management Strategies

The objectives of sales and distribution management can be achieved with efficient strategies. Let us see some strategies that you can opt for to increase sales of your products.

Start with local distribution: This strategy focuses on serving a smaller area and getting products to customers quickly.
Handle national distribution: Some businesses want to reach customers all over the country. They use this strategy to send products to faraway places, like shipping pipes to stores across the entire country.
Use third-party logistics: Businesses can hire other companies to handle their distribution. These companies are distribution experts who make sure products reach the right places.
Use online marketplace: This is when a company sends products right to the customer’s doorstep.
Open regional warehouses: You can open warehouses in different areas to store products. It makes it easier to get the products where they are needed, which ultimately increases sales.

What Are the 4 Channels of Distribution?

Four main channels of distribution help in transporting products to the customers.

Direct sales: This is when a company sells its products directly to customers through e-commerce websites.
Distributors: They buy a large quantity of products from manufacturer and sells them to wholesalers in their area.
Wholesalers: They buy products from distributors and sell them to local stores.
Retailers: They play an important role in the retail and distribution management of products. These are the stores from where customers buy products.

Efficient Distribution Management is very important to maintain the supply chain. It helps businesses to increase sales and revenue. If you understand it's important but find it challenging, then you should get help from TranZact. They help businesses keep a record of everything, from inquiry to dispatch. Whether it's a small business or well-established, you can use TranZact software to maximize the productivity of your business, which will ultimately increase sales and revenue for your business.

Distribution Management FAQs

Q1. What is distribution management?

Distribution Management is the process of planning that helps businesses transport their products from where they are produced to the place from where customers can buy them.

Q2. What is an advanced distribution management system?

An advanced distribution management system (ADMS) is a computer-based program. It helps businesses to optimize the data properly related to product distributions. The main features of ADMS (Advanced Distribution Management System) include;

Inventory Management
Order Management
Warehouse Management
ERP Integration
Routing and Scheduling the Products
Supply Chain Management
Preparing Reports

Q3. What is sales distribution management?

Sales distribution management is a strategy for organizing and managing a company’s sales efforts to make sure products reach customers effectively. Q4 What is a fibre distribution management system? A fibre distribution management system is a process of managing the distribution of fibre-optic cables and related equipment in telecommunications networks.

Q5. What is power distribution management?

Power distribution management involves monitoring and controlling the flow of electricity within an electrical grid to ensure efficient distribution of power.

Q6. What are the elements of distribution management?

Distribution management involves several key elements that work together to make sure the product reaches the customers more efficiently. Some of the main elements of distribution management are: