Why Efficient Distribution Management is Essential

Efficient distribution management is a common business challenge. Many factors contribute to this, including complex global supply chains, inventory management issues, variable demand, lacking technology integration, and rising transportation costs. Other obstacles include a lack of real-time visibility, regulatory compliance burdens, and customer expectations of next-day or two-day delivery.

These issues seem daunting, but there are many reasons efficient distribution management is vital to your business. These include satisfied customers, lower costs through optimization, competitive advantages, flexibility in the face of change, better use of resources, and supply chain resilience.

Let’s explore how investing in efficient distribution management pays long-term -- and how best to achieve it.

Distribution management 101

Distribution management is how goods are processed and moved from raw materials to customer delivery. It encompasses order processing, fulfillment, inventory management, transportation, and customer relations. Efficient distribution management comprises tools and best practices that optimize every supply chain piece, allowing products to arrive on time and on budget.

The team making this happen includes manufacturers, suppliers, carriers, and retailers. Efficient distribution management lowers costs, exceeds customer expectations, and creates a competitive niche.

Distribution managers

Distribution managers are key to this ecosystem. They organize and coordinate how goods and products get made, stored, and sent to their final destinations. They are the communication hub between suppliers, warehouses, transportation companies, and customers. They monitor sales, inventory levels, invoices, and budgets. They generally work for companies that move products from several manufacturers and are often the point person for retailers and other sellers, providing them with catalogs of what’s available and what’s coming.

A distribution manager’s typical day includes negotiating contracts; managing shipping schedules, cost, and stocks; coordinating vehicles, loads, and drivers; digging into data to analyze performance and brainstorming ideas for improvement; meeting health and safety standards; and troubleshooting when difficulties arise.

Distribution technology

Emerging technologies are changing how goods are processed, stored, and delivered. They have made distribution management a more efficient, sustainable, and cost-efficient industry. Here are just some of the innovations that are transforming the sector:

• Drones: Drones are an increasingly popular tool inside and outside of a distribution center. These small, crewless vehicles have the potential to revolutionize the deliveries because they reduce the need for ground transportation
• Automation and robotics: Robotics and automation are essential for modern warehouse operations. They can position goods more precisely than human workers and reduce the likelihood of product damage and worker injury. They can also lower costs by reducing the number of workers needed when labor continues to be in short supply
• Big data: More data on customer behavior is available than ever, and distribution companies are now able to pinpoint and correct supply chain trouble spots, allowing them to improve production and delivery efficiency
• Internet of Things (IoT): With IoT, distributors can easily track goods are at any point and monitor their progress. This provides unprecedented insight into products’ condition when it reaches the customer, and giving customers tools to track packages in real time
• Self-driving vehicles: The era of autonomous trucks is fast approaching, where vehicles would reduce the need for human drivers on repeatable routes that are easy to navigate with minimal disruption. Human drivers would still handle more complex shipments
• Blockchain: Blockchain’s decentralized structure allows companies to reduce risk and enhance visibility. Goods can move through the supply chain sustainably and ethically, lowering the risk of fraud or counterfeit transactions. Industry leaders like FedEx, Mitsubishi, and DeBeers have all adopted blockchain into their operations.

These innovations are part of a seismic shift in distribution management across many industries, making the process more affordable, efficient, and accountable.

Components of an efficient distribution management system

At its core, distribution management is the path goods take from the supplier or manufacturer to the point of sale. These goods go through packaging, inventory, warehouse, and transportation. Efficient distribution management ensures the right product in the right amount gets to the right customer at the right time with few hurdles. When done right, it keeps inventory turning over, business processes moving efficiently, profits growing, and most importantly, customers happy and returning.

There are many technology tools available making this happen. These include inventory management systems (IMS), vendor relationship management systems (VRM), warehouse management systems (WMS), transportation management systems (TMS), and customer relationship management systems (CRM).

Inventory management in distribution

Managing inventory is critical for any supply chain, tracking of all your goods from production to warehouse to customer. A key part is inventory visibility—when and how much to order, and where to put it all. This is necessary for accurately filling every order without outages or overstocking.

A basic inventory management plan includes:

• Purchasing: Goods are bought and shipped to the warehouse or the point of sale
• Storing: You need storage while orders are placed and fulfilled
• Profiting: Stock is carefully controlled to maximize sales and minimize waste

Inventory management is key to any supply chain. It’s also a high-wire balancing act, maintaining that ideal, Goldilocks amount that keeps everything moving smoothly.

Distribution transportation and logistics management

Transportation and logistics optimization lowers cost and increases efficiency in moving goods effectively. Here are some best practices to achieve those goals:

• Automate delivery systems: Automation tracks a complex network of pickups and deliveries, reducing the likelihood of late or incorrect shipments
• Analyze routes and rates: A regular review of each distribution route and its costs simplifies optimizing transportation infrastructure
• Be transparent: Let customers track their orders and know where they are at all times
• Protect your data: Data security is paramount -- transportation involves sensitive customer data, including names and contact and payment information
• Work as a team: Logistics is very collaborative and only works when team members all pull in the same direction

Solid transportation and logistics infrastructure means your products move through the production process and arrive successfully.

Inefficiency’s domino effect

Inefficient distribution management isn’t just a detour from success, it’s a potential source of significant problems for you and your clients. Distribution is the nervous system that serves innumerable industries and keeps goods flowing around the world. Just one inefficiency can quickly create a snowball effect of higher costs, lower customer expectations, and even compromised worker health and safety.

But even inefficiencies can present opportunities for those who know where to look:

• Improvements in operational efficiency add value to your business and to suppliers, shareholders, and customers. leading to potential profit growth
• Forward-thinking leadership makes fixing inefficiency a chance to improve employee experiences by giving workers more schedule autonomy, upgrading their workspaces, and expanding the pool of potential recruits to include Spanish speakers
• A more efficient environment provides opportunity to build capacity and inventory, thereby providing greater variety for customers

Removing inefficiencies can also give your team a competitive advantage. Look no further than Amazon: the massive online marketplace has leveraged technology, strategic partnerships, and data analytics to facilitate its fast, accurate delivery service. An extensive network of fulfillment centers and advanced logistics systems allows the company to fill orders efficiently and quickly for a seamless customer experience.

Adaptability and Resilience

Distribution management builds a more resilient and adaptable supply chain. Increased raw material inventory prevents supplier disruptions during shortages. Robust data allows your business to adapt, helping inventory managers keep accurate stock counts.

Consider a 3PL

Efficient distribution management seems daunting task to tackle alone. You’re not alone -- a third-party logistics (3PL) firm helps facilitate a solution that keeps operations running smoothly for all stakeholders.

Ryder offers nearly a century of distribution experience and uses it to identify and mitigate weaknesses while boosting your strengths.