How does a business come to effective distribution?

Category: Business/Finance >> Finance & Taxation

Ans:

I. Concept of Distribution Management

As the business of an organization is expanding, the business outlets are spreading all over the country. The concept of distribution management

With the continuous expansion of business, business outlets across the country. In the manual, telephone, fax and other traditional ways, the enterprise existing distribution channels there are many problems: corporate headquarters can not real-time monitoring of branches, offices, business outlets around the business situation; ordering, sales, inventory and other data and information feedback is not timely, commodity backlogs, out-of-stock situation often occurs; documents, business data collection serious lag, poor accuracy, not conducive to the statistics, analysis and processing; Customer demand and market information is not timely feedback to the headquarters, so that enterprises to develop production forecasts and commodity allocation plan with many larger blind, business decision-making lack of accurate data and information support, and so on.

Therefore, distribution management is very necessary, then what is distribution management?

Today's industrialized products have gone through market research, product design, research and development, production, marketing, sales and after-sales service and other seven stages. Which by the product production to the user to buy the process, is the use of external resources to complete the sales of goods and services process, this process is called distribution management. Distribution network is to make full use of the dealer's resources for the sale of goods to the organization, it is connected to the manufacturers and customers of the bridge. Distribution management needs customers, sales, capital and media and other external resources, generally speaking, customer resources is one of the most important resources. But the specific situation needs to be analyzed, in fact, the most lack of resources is the most important resources. Manufacturers should evaluate the resources of their dealers according to their own resource status, so as to choose the most appropriate resources.

As most of the enterprises rely on distribution as the main sales channel, distributors are both their partners, but also their market, sales, service front resident. So to be able to understand the operation of the distributor in a timely manner, to give the stability of the necessary collaboration is the goal of every manufacturer's expectations. However, due to the inconsistency of the development of information technology level, a lot of information communication still needs a lot of manual intervention, thus, leading to the enterprise can not accurately understand the distributor's business, financial information, the result is often that the enterprise can not effectively determine the scale of production and the time of goods shipment, which in turn causes inventory backlog, affecting the normal turnover of funds or even the whole enterprise's decision-making and strategic deployment. When all these contradictions become a bottleneck restricting the development of enterprises, it is necessary to take the necessary measures to overcome the bottleneck, so distribution management is very important in the process of enterprise management.

II. Distribution business model

In distribution management, there are many kinds of distribution business model, including: channel structure, sales methods, settlement methods, storage and transportation methods, training systems, advertising, promotional tools and other parts. People tend to emphasize little business model, the focus of the work is to think of how to sell goods to dealers, but little emphasis on the consequences of the business model is to hoard goods to dealers, blocking the access. Dealers in order to keep the blood money, only to dump the goods, which will inevitably disrupt the manufacturer's price system. Therefore, in order to occupy the market for a long time it is necessary to consider the interests of consumers, dealers, manufacturers and other tripartite interests, the construction of a sound network to start from the business model. Figure 1. Distribution business model spells out in detail the specific shape of the various business models.

III. Elements of the distribution system

In distribution management, the distribution system is a very important concept, which includes six elements, namely, cost (cost), capital (capital), control (control), market coverage (coverage), characteristics (character) and continuity (continuity). In English, these six factors all begin with the letter "C", so some people call it the "six Cs of channels". The analysis of these six "C" is the basis of the distribution system.

Cost

One of the first considerations in developing a distribution strategy is cost. The cost of the distribution system consists of two parts, one is the cost of development, including investment in fixed equipment, research costs. The second is the cost of maintenance, including equipment rental, vehicle fuel consumption, personnel wages and other variable costs. Some system development costs are low, but the maintenance cost is very high, some on the contrary, the development of the initial need for huge investment, but the maintenance cost is very low. Enterprises in the choice of distribution system should be weighed from the perspective of long-term development of these two costs.

Capital

When choosing a distribution system, a company should consider the capital requirements and cash flow in different ways. For example: if in the establishment of its own distribution system, usually requires a large capital investment; through the intermediary distribution of products usually do not require the company to make a cash investment. Distributors generally do not require the company to make cash flow before selling the goods, but often require a subsidy at the beginning.

Control

"Control" refers to a company's ability to control its distribution channels. If the company has more of this control, it will be able to better manage its sales force, understand changes in market demand, and thus sell its products and services in a more effective way.

A company setting up its own distribution system is a larger investment, but it ensures that the company has control over its distribution channels. The longer the distribution channel, the less control the company has over prices, sales, promotions, and sales methods. There are two ways to strengthen the control of distribution channels, one is to establish their own distribution organizations in close proximity to customers, and the other is to shorten the distribution channels as much as possible, the specific choice depends on the company's ability to capitalize on and manage.

Market Coverage

The three objectives of market coverage are: to achieve the target sales volume; to achieve the target market share; and to achieve a satisfactory market penetration rate. Sometimes due to various reasons, enterprises can not achieve the above three objectives at the same time, and always lose sight of the other. At this time, the enterprise needs to prioritize these three objectives and clarify which one is the most important core objective for the company's long-term development. For example, because of the limited channels and funds, some companies do not require all markets to be taken into account in the actual marketing process, but rather to strengthen market penetration in densely populated areas.

Characteristics

The characteristics mentioned here include company characteristics and target market characteristics. The former is mainly the nature of the product, such as physical properties, technical content, etc., but also includes other than the product related to the company's content, such as the company's size, reputation and financial status. These properties determine what kind of channel sales are suitable for the company. For example, insurance products require short channel sales, while standardized products can be sold through long channels. Another example is that premium cosmetics are suitable for sale in department stores or cosmetic boutiques with elegant shopping environments.

Target market characteristics include customer characteristics, intermediary characteristics and competitor characteristics. If the customer's purchase quantity is small and the purchase frequency is low, the company is appropriate to use a longer distribution channel. Factors such as whether the intermediaries bear the cost of storage and transportation and advertising costs should also be taken into account. In addition, the company should determine its own channel strategy based on its competitors.

Continuity

What is actually being considered here is the longevity of the distribution channel, i.e., which distribution methods will be chosen to ensure the smoothness and stability of the sales channel. To avoid disruption of the distribution channel, the company must establish a good brand to prevent intermediaries from switching to other companies.

IV. Conclusion

In the distribution management, by helping enterprises to establish a clear analysis of responsibilities and rights, the process of controllable distribution system, you can realize the true meaning of e-commerce information management. And through the comprehensive record of business data generated by the business activities of enterprises, documents, commodity inventory and other information to help enterprises realize: real-time, accurate access to business data around the headquarters of the distribution network of business activities as in the palm of your hand, for business managers to provide direct and useful decision-making support; to strengthen inventory control and replenishment capabilities, accelerate commodity turnover, improve capital turnover; timely feedback Analysis of customer opinions, more targeted improvement of products and services, improve customer satisfaction; optimization of the company's internal and external business management processes; distribution network and the Department of efficient and timely through the information communication channels to achieve interactive information exchange, low-cost distribution network and the headquarters of the concerted weekly work objectives, greatly improving the efficiency and quality of information communication; strengthen the collaborative work with the agent and the ability to manage and so on.

Therefore, the distribution system management can make the enterprise in the supply chain management with a strong macro-control ability, can provide customers with a complete transaction, goods, funds, bills and other information integrated management functions. In the reduction of manual business processing, to promote the various sectors of the information **** enjoy, for enterprises to realize the demand for production, reduce inventory, improve competitiveness and so on has an important significance.