What is Distribution Management
Distribution management refers to overseeing the movement of goods from supplier or manufacturer to point of sale. Distribution management is an overarching term that refers to numerous activities and processes such as packaging, inventory, warehousing, supply chain and logistics.
BREAKING DOWN Distribution Management
Successful distribution management requires effective management of the entire distribution process and is critical to financial success and corporate longevity. The larger a corporation, or the greater the number of supply points a company has, the more it will need to rely on automation to effectively manage the distribution process.
Modern distribution management encompasses more than just moving products from the point A to point B. It also involves gathering and sharing of relevant information that can be used to identify key opportunities for growth and competitiveness in the market. Most progressive companies now utilize their distribution forces to obtain market intelligence that are vital in assessing their competitive position.
There are basically two types of distribution: commercial distribution (commonly known as sales distribution) and physical distribution, better known as logistics. Distribution involves such diverse functions as customer service, shipping, warehousing, inventory control, private trucking-fleet operations, packaging, receiving, materials handling, and plant, warehouse, store location planning, and the integration of information. The goal is to achieve ultimate efficiency in delivering raw materials, parts, partially and completely finished products to the right place and time, in the proper condition.
Physical distribution planning should align with overall channel strategy.
Distribution Management as a Marketing Function
The fundamental idea of distribution management as a marketing function is that management of distribution happens in an ecosystem that also involves consideration of...
- Product: Not always a tangible object, product can also refer to an idea, music or information.
- Price: This refers to the value of a good or service for both the seller and the buyer, which can involve both tangible and intangible factors, such as list price, discounts, financing, and likely response of customers and competitors.
- Promotion: This is any communication used by a seller to inform, persuade, and/or remind buyers and potential buyers about the seller’s goods, services, image, ideas, and the impact it has to society.
- Placement: This refers to the process that ensures the availability, accessibility and visibility of products to ultimate consumers or business users in the target channels or customers where they prefer to buy.
Effective distribution management involves selling your product while assuring sufficient stocks in channels while managing promotions in those channels and their varying requirements. It also involves making sure that a supply chain is efficient enough that distribution costs are low enough to allow a product to be sold at the right price, thus supporting your marketing strategy and maximizing profit.