Distribution management is a process that involves the distribution of inventory at all levels. For any manufacturing or trading firm, managing the distribution of products being provided for sale at retail locations is of prime importance. There is generally a separate department to look after this process in every company irrespective of whether it is large or small. Appropriate distribution management forms an essential part of functioning of a successful organization. If inventory is not managed efficiently and effectively, it generally leads to wastage and loss of goods that turns out to be harmful for the company’s interests. It can also lead to non-fulfillment of delivery timeliness.
Although it is felt by some managers that distribution management is an expensive function, it actually leads to huge savings in the long run. This is because the monetary advantages that can be reaped by allocating inventory to the right place at the right time far outweigh the costs involved in training personnel for affecting this process. It may require a certain amount of resources and manpower initially to bring about effective distribution management but the results are clearly visible by way of increased profits that are inevitable as a result of this process. Some of the reasons why improper distribution management can increase your costs have been mentioned below:
Although it is felt by some managers that distribution management is an expensive function, it actually leads to huge savings in the long run. This is because the monetary advantages that can be reaped by allocating inventory to the right place at the right time far outweigh the costs involved in training personnel for affecting this process. It may require a certain amount of resources and manpower initially to bring about effective distribution management but the results are clearly visible by way of increased profits that are inevitable as a result of this process. Some of the reasons why improper distribution management can increase your costs have been mentioned below:
- If an effective and transparent method of distribution is not developed, it may lead to pilferage of goods as there are no checks maintained on inventory levels during different stages of production.
- Improper distribution management also leads to escalated costs in the long run as firms can miss out on making sales as a result of having a lesser amount of stock than is demanded in the market. Proper distribution management on the other hand consists of various tools that help assess the correct levels of demand and thus help provide the required amount to customers. This ensures that equality is being maintained in the quantity of goods demanded and supplied.
- Improper distribution management can lead to huge correction costs that may need to be incurred whenever anything goes wrong in the distribution process.
