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21.06.21

For years, distributors have acted as intermediaries between manufacturers and consumers by managing the movement of goods from one party to another. However, to cut costs and gain market dominance, manufacturers and retailers are beginning to establish their own distribution networks, effectively cutting distributors out of the picture completely. The future of distribution, therefore, is left uncertain as distributors are unable to sustain profitability and their position within the market. 

 

Inventory Management

Inventory management is arguably the most important aspect to get right to run an effective distribution network – but equally as challenging, particularly as they grow and transform into multisite, intercontinental networks. Without inventory management there is no way of knowing how much stock is available or how many items have been sold. Without these details, there is no way for distributors to know which products to restock and when, leaving customers frustrated with delays and missed deadlines.  

Although these problems still exist for many distributors, there is technology available that can help solve these challenges. Specific technology and software enables distributors to: 

  • Track goods in real-time across multiple warehouses and in different countries 
  • Rely on accurate data running through the system 
  • Run demand driven forecasts with AI to help predict trends, peak periods and commonly purchased products  
  • Barcoding & RFID tags on products to collect big data and track goods from order-to-delivery
  • Handle returns and case management on items returning to the warehouse  

If you would like to learn more about how this can be achieved, speak to one of our distribution team members today. 

 

Rising Customer Expectations  

With the rise of ecommerce and market competition, customer expectations continue to rise – particularly in the B2C market where customers expect fast delivery times and outstanding customer service. 

To cope with consumer demand, distributors have had to adapt and improve their services, and whilst this is beneficial for the customer, distributors are often left with reduced profit margins in an increasingly competitive environment. However, with the right tech and expertise, distributors can meet both market competition and consumer expectation. 

Distributors can shorten the time between order and delivery by automating processes within the distribution network. In doing so, a more efficient system is established which ultimately reduces error probability, enabling distributors to shorten lead times and offer outstanding customer service.

Automation can take place across sales, ordering, procurement, picking and much more, meaning you can better utilise your resources and employees elsewhere in the business.   

Interested to find out how automation can be achieved across your distribution network? Get in touch with one of our distribution team members today. 

 

Disintermediation

Retailers and manufacturers are continuing to establish their own distribution networks to cut distributors out of the equation and get their products directly to customers. This means that manufacturers can sell their products for a higher price, whilst retailers get those products cheaper as they purchase directly from the manufacturer. 

The driving force behind this movement is largely down to technology, with retailers being able to contact manufacturers through online platforms and marketplaces, making it easier to work with manufacturers directly. However, technology can also aid distributors by providing services essential to manufacturers but impractical to implement themselves.  

Vendor Managed Inventory (VMI) is a supply chain agreement that establishes the distributor as responsible for inventory size and ordering costs based on data shared between the distributor and manufacturer. Achieved through a combination of technologies to facilitate data-sharing, VMI establishes a much more efficient and cost-effective system than traditional methods. Using this approach can provide a multitude of benefits for retailers and manufacturers, including:  

  • Lower operating inventory levels 
  • Removal of safety stock 
  • Reduction in procurement related admin costs 
  • Cost efficient warehouse