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Distribution

Management
Introduction
Basic Concepts of Distribution
Increases the reach
Right quantity at the right time at the
right place
Provides reasonable earnings to those
who are associated with the distribution
like wholesalers, retailers etc.
Answers qns- Anderson
Consulting approach
What are the distribution objectives
What channel structures will achieve the
objectives at the lowest cost
How do we manage our network to
achieve the objectives at lowest cost
What processes and organisation
structure will help sustain the distribution
networks performance

Objectives
Product Availability Percentage of
outlets/ coverage for doctors (pharma)
How many outlets do I need?
What type of outlets I need?
What regions do I need to enter?
Who are the end customers?

Anderson Pyramid
IT Policies/Procedures Facilities/Equipment Channel
Mgmt
IMPLEMENTATION
Intermediate mgmt Warehouse/Transport Materials
mgmt
PROCESS
Channel Design Network Strategy

STRUCTURE
Distribution
Objectives

STRATEGY
DDI/CDI
Distribution Development Index = Availability of
a brand/category in the market relative to that of
a benchmark brand/category
Category Development Index =
Per capita consumption of the category in that
market relative to the national per capita
consumption of the category.

The above will determine the scope for distribution
in that market.

Channel Design
Functions Redistribution, stocking, collection,
disbursements
Type of intermediaries CFA, Distributors,
Wholesalers
Services required Inventory, credit,
infrastructure, lead times
Service from the organization No. of outlets,
frequency of coverage.
For FMCG 5 lac outlets with 1500 distributors
required
Network Design
How many mfg units/Depots/CFA?
Which regions/customers to be serviced
from a facility?
How much inventory at each facility?
Using efficient methods, Distribution costs
reduced by companies to the extent of
10-15%
Logistics management
Activities related to distribution
Art of moving
Organizations need
1. Land
2. Water
3. Energy
4. Storage
5. Machinery
6. Warehousing
7. Transport equipments like trolleys
8. Communication equipments
9. Manpower
10. Measures like pollution control, energy savings etc
Hence need for efficient logistics systems.

Logistics management
Term derived from army
Meeting the troop requirements
Now it is used in business extensively

Design and Operation of the physical,
managerial and informational systems
needed to allow goods to overcome time
and space (from the producer to the
consumer)
Key Players in logistics
Shippers
Suppliers of services
1. Carriers
(rail/road/air/water/pipeline/rope-way)
2. Warehouse providers
3. Freight Forwarders
4. Terminal Operators (Ports)
Government
Government
CST
LST
Excise Duties
Octroi / Entry Tax
VAT
MV Act
Distribution Policies

Logistics Costs
Product inventory
Pipeline inventory
Inventory at warehouses
Transit losses/insurance
Storage losses/insurance
Handling and warehouse operations
Packaging
Transportation
Customer shopping costs
Physical Distribution Defined
Broad range of activities concerned with the
efficient movement of finished goods from the
end of production line to the consumer.
Freight
Warehousing
Packing
Inventory
Selection of site for activities
Marketing
Forecasting
Discussion
Distribution channels for
1. Packaged milk
2. Photocopying machines
3. Computer Hardware