Distribution Management and Planning

Distribution Management

• It is the management of the movement and coordination of supply and demand in creating time and place utility for goods.
• It's about ensuring the right product, in the right quantity, at the right time, and at the right place.
• This is crucial for international markets due to distance and transportation time.
• It's an integral part of sales management - they are interconnected.

Distribution Planning

• A systematic decision-making process for the physical transfer of goods and services from manufacturer to final user.
• It involves the following functions:
  • Transportation: How to transfer goods from the producer to the consumer.
  • Inventory Management: Keeping the product safe and maintaining stock levels to avoid shortages.
  • Customer Transactions: Following up with customers, gathering feedback, and ensuring satisfaction.

Distribution Channel

• A medium by which goods and services are made available to consumers.
• It's composed of marketing intermediaries.
• It's made up of people or organizations involved in distributing products, including manufacturers, service providers, wholesalers, retailers, marketing specialists, and consumers.

Basic Types of Distribution Channels

• Direct Channel Distribution: Goods are transferred directly from the manufacturer to the final user or customer, without the intervention of independent intermediaries.
• Indirect Channel of Distribution: Goods are transferred from the manufacturer to independent intermediaries, and then to the customer.

Intensity of Channel Coverage

• Exclusive Distribution: A limited number of middlemen are used in a geographic area.
• Selective Distribution: An organized moderate number of wholesalers or retailers are used.
• Intensive Distribution: Many middlemen are used for widespread market coverage and channel acceptance.
• Dual Channel Distribution: Uses a combination of distribution channels to appeal to different market segments.

Physical Distribution

• Includes:
  • Customer Service: Satisfying the customer to the maximum level.
  • Shipping: Transferring durable products from one location to another, usually a long distance.
  • Warehousing: Storing raw materials, semi-processed goods, and final products.
  • Inventory Control: Providing sufficient supply of raw materials at the right quantity, time, and quality.
  • Packaging: Making the product presentable, including its taste, color, size, weight, and shape.
  • Receiving Materials Handling: Properly managing materials for final production.

Transportation

• It refers to the organization's ability to transport available goods to the customer.
• It helps in the proper distribution of products for customer satisfaction and continuous patronage.

Transportation Forms

• Railroads: Carrying heavy, bulky items, low value, over long distances.
• Motor Carriers: Transporting small shipments over short distances, within a town, and between towns.
• Waterways: Moving low-value but high bulk freight on barges, tankers, freighters, and intercoastal shipping.
• Pipelines: Reliable continuous movement of liquids, gases, and semi-liquids.
• Airways: Fastest, most expensive form for perishable and emergency goods.

Transportation Services Companies

• Government Parcel Post: Documents or goods sent under the custody of the local or national government for safe and timely delivery.
• Containerization: Placing goods in sturdy containers that are loaded safely on trucks, ships, or planes for reduced damage and theft.
• Freight Forwarding: Specialized firms that consolidate small shipments from several companies and organizations. They pick up, arrange, and ensure delivery at the buyer's door.

Categories of Transportation Firms

• Common Carriers: Transport goods for anyone, and cannot refuse shipments unless the carrier's rules are broken.
• Contract Carriers: Provide transportation services for one or a few specific shippers and goods based on individual agreement.
• Exempt Carriers: Excused from regulations; must comply with safety requirements. Most agricultural goods are exempt.
• Private Carriers: Shippers use their own facilities, subject to safety rules and regulations from government.

Inventory Management

• Objective:
  • Provide a continuous flow of goods.
  • Match inventory levels closely with sales demand.
  • Meet required profit margins.

Inventory Management Concepts

• Just in Time (JIT): Ordering more frequently and in lower quantities to reduce inventory held on hand. This requires better planning and forecasting.
• Quick Response (QR) Inventory System: Immediately responding to required materials needed in production.
• Electronic Data Interchange (EDI): Computer linkups between suppliers and manufacturers, increasing sales through monitoring of available stocks.

Warehousing

• Physical facilities for storage of goods, maintaining supply for efficient delivery.

Warehousing Types

• Private warehouses: Owned, managed, and operated by firms that store and distribute their own products.
• Public warehouses: Provide storage and related physical distribution services to any firm or individual on a rental basis.

This quiz covers essential concepts of distribution management, including the coordination of supply and demand, distribution planning, and the various distribution channels involved in getting products to consumers. Understanding these principles is vital for effective sales management, especially in international markets.