The kind of distribution strategy that you choose to incorporate into your organization can have a significant impact on your operations as well as your profit making abilities. The productivity can also be affected if the wrong decisions regarding centralization or decentralization are taken by the company management. The decision of whether to go in for the former or the latter should depend entirely on particular business needs. For certain businesses, a centralized system of distribution may work best while for certain others, a decentralized strategy may lead to the highest profits. In the case of some organizations however, a mélange of the two works best. Thus several factors need to be considered before this decision is made.
In case your company has a widespread customer base that even includes international and overseas customers, it is advisable to go in for a decentralized distribution strategy that can help minimize costs of maintaining supply chains. A centralized distribution system in such a case can prove to be highly expensive and can even make it difficult for your company to maintain profits. A decentralized system helps bring in enhanced efficiency as local dealers and distributors are more aware of the demand structures of the local populations. It is also easy for local distributors to maintain contact with the end customers and assess their requirements that can then be conveyed to the company providing products for sale.
A centralized system is deemed to be more suitable for business organizations that either have a local area of operation or are enterprises with a highly inflated capital structure and can afford to invest in their separate department of distribution and employ workers in different geographical locations to distribute goods. In such a case, the profits made by eliminating the middlemen and going in for direct distribution generally tend to be more than the investments required for supplying the products. Only companies that can afford to invest in infrastructure and technologies needed for distribution to far off locations should opt for a centralized system of distribution. A significant advantage of having this kind of a system is that the ultimate control rests with the company itself and power need not be divested to the lower levels.
For more information, contact McLane Logistics Technology located at 4001 Central Pointe Parkway, Temple, TX 76504. You can also call them at 1-800-989-7568.
In case your company has a widespread customer base that even includes international and overseas customers, it is advisable to go in for a decentralized distribution strategy that can help minimize costs of maintaining supply chains. A centralized distribution system in such a case can prove to be highly expensive and can even make it difficult for your company to maintain profits. A decentralized system helps bring in enhanced efficiency as local dealers and distributors are more aware of the demand structures of the local populations. It is also easy for local distributors to maintain contact with the end customers and assess their requirements that can then be conveyed to the company providing products for sale.
A centralized system is deemed to be more suitable for business organizations that either have a local area of operation or are enterprises with a highly inflated capital structure and can afford to invest in their separate department of distribution and employ workers in different geographical locations to distribute goods. In such a case, the profits made by eliminating the middlemen and going in for direct distribution generally tend to be more than the investments required for supplying the products. Only companies that can afford to invest in infrastructure and technologies needed for distribution to far off locations should opt for a centralized system of distribution. A significant advantage of having this kind of a system is that the ultimate control rests with the company itself and power need not be divested to the lower levels.
For more information, contact McLane Logistics Technology located at 4001 Central Pointe Parkway, Temple, TX 76504. You can also call them at 1-800-989-7568.
