Distribution means different things to each business and can consist of specialist distribution to a supply chain function within a vertically integrated enterprise. Regardless of the specifics of the actual distribution company, the distribution field can be very complex and timely replenishment of all products from the supply chain to the end customer is vital for a distribution company to succeed.
There are a number of challenges that distribution companies face and many problems can be reduced with high quality distribution software as well as with an Enterprise Resource Planning system.That said,here are five of the more common challenges affecting distribution companies today:
1.Management on a global scale
The fact that certain products are much cheaper in some countries compared to others has led to a big push in global distribution. This has brought with it, its own difficulties and challenges for distribution companies. Some common global problems that distributers face are: difficulties in tracking visibility, longer lead times and creation of a multi-tier distribution network that is intended to support inventory distribution.
2.Growth Management
The financial crisis of 2008 affected many industries and one industry that was hit was the distribution industry although we are seeing a gradual recovery. Wholesale distributers are managing products and margins much closer than before in order to ensure profitability. Distributers have also begun to offer a wider range of products in an attempt to reach out to a more customers. Distributing these additional products in the most efficient manner can be difficult as a new distribution network needs to be designed andthiswill most likely require a considerable investment.
3.Demand Management
Demand management can be difficult for distributers since they constantly have to manage changes in their customer’s base as well as meet the ever increasing and ever changing expectations of their customers despite the fact that the level of demand of the product is still a matter of uncertainty. In addition to this, accurately balancing long lead times, economic factors and logistical constraints in parallel with each other can be difficult.
4.Transportation and Logistics Management
The logistics of the transportation landscape is not the same as it was a few years ago. This in turn has forced supply chain professionals to build a new strategy from the ground up. Distributers need to consider the way they address increasing merchandise costs, weak merchandise network infrastructure, changing government regulations and constrained network-wide capacity. To cater for this, an increase in the awareness of logistics data is needed.
5. Staying Competitive
The challenges already mentioned have somewhat contributed to creating fierce competition between distributers and companies are always looking for new ways to compete with their competitors .Many wholesaler-distributers now offer product replenishment, assortment optimisation, shelf space layout, as well as product repair and warranty services. Some wholesaler-distributers have even gone as far to offer competitive pricing analysis in an attempt to gain customer loyalty.