DPL5023-DISTRIBUTION MANAGEMENT/DIS 2016

CHAPTER 2: COMPONENT OF DISTRIBUTION MANAGEMENT

1. DEFINITION OF DISTRIBUTOR

- A wholesaler or middleman in the distribution of a category of goods to retailers in a

specific area

2. CHARACTERISTICS OF WHOLESALE DISTRIBUTOR

i. PRODUCT ACQUISITION

 An activity to posses/gain products from various manufacturer

ii. PRODUCT MOVEMENT

 Product is in the form of materials, components, assemblies, work-in-process, or

finished goods, transportation is necessary to move it to the next stage of the
manufacturing process or physically closer to the ultimate customers.

iii. PRODUCT TRANSACTION

 A transaction usually means a sequence of information exchange and related

work that is treated as a unit for the purposes of satisfying a request and for
ensuring database integrity.

3. THE ROLE OF DISTRIBUTION FUNCTION

a. selling and promoting

 To differentiate to product from their competitors.

 To communicate product information.

 To urge product used.

 To expend the product distribution.

 To reduce overall sales cost.

 Create new demand.

b. buying and building product assortments

 The set of all product lines and items that a particular seller offers for sale to
buyer
 wholesalers must decide on product assortment and services, as well as the
other marketing mix element
 we are now familiar with prices, promotion and place.

c. bulk breaking
 Buying large quantities of goods and then reselling them in smaller units

 Reflecting some of the cost savings made through bulk buying in the resale price.

 A prime function of intermediaries

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d. value-added processing
 Value added refers to “extra” feature of an item of interest product, service,
employees that go beyond the standard expectations.
 For example product consultations, free service or maintenance

e. Transportation
 Control the cost of transporting goods and materials, as well as to determine the
most efficient way to store them.
 Controlling the movement of materials and goods from their source to their
destination.
 Satisfy demand as quickly, capably, and cheaply as possible.

f. Warehousing
 Performance of administrative and physical functions associated with storage
of goods and materials. These functions include :

i. Receiving- Unloading from the inbound transportation mode; Verifying quantity

and condition of the material; Documenting the information as required
ii. Storage - Retention of products for future use or shipment
iii. Replenishment- Relocation of materials from storage to a temporary re-supply
area from which orders are filled
iv. Order selection - Picking the required quantity for movement to a packing area
v. Checking - Verifying and documenting order selection – product number &
quantity
vi. Put-Away - Removing the goods from the receiving dock; Transporting the
goods to a storage area; Moving the goods to a specific location and recording
this movement; Identify where the material is placed

g. merchandizing
 Including activities to plan, control and manage the flow of merchandise from a
vendor to a distribution center and then on to the store or customer
 Merchandising activities may include display techniques, free samples, on-the-
spot demonstration, pricing, shelf talkers, special offers, and other point-of-sale
methods.

h. marketing information
 The distribution channel also can provide information regarding product,
marketplace issues, and competitors' activities in a relatively short time

i. sequencing

 A supply chain ordering and inventory management tool which governs the flow
of raw materials to the manufacturer and of the manufactured item to the first tier
customer. The goal is to have the materials arrive at the manufacturing facility
within hours of use thereby creating zero standing inventory and eliminating the
expense and damage risk of stocking and pulling materials. The delivery
schedule is based upon a forecast for delivery, manufacturing lead times and
material availability.

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4. TYPES OF WHOLESALE DISTRIBUTOR

a. merchant wholesalers
 These wholesalers own the products they sell.
 Merchant wholesalers often specialize by certain types of products or customers

b. Brokers
 A person who buys and sells goods or assets for others.

c. agents

 One that acts or has the power or authority to act; an agent who handles
business affairs for another

d. manufacturers’ and retailers’ branches and offices

e. exporting and importing distributors

f. miscellaneous distributors

5. The need for wholesale distribution

 wholesale distributor buy, store and distribute goods. Wholesale distributors make it
less complicated for retailer to obtain the items by offering lower prices
 wholesale distributor can offer lower price to retailers since they purchase in bulk
 wholesale distributor identify their target market of retailers and resellers
 always keep inventories in their warehouse therefore retailers do not to keep extra
goods

6. Elements of physical distribution flow management

a. incoming materials and information

 the raw materials, standard items ,subcontracted parts . These include:- direct
materials, Raw materials and Semi finished components

 Bought out components such as subassemblies, assemblies Indirect materials,

Once the product design, development is completed , product specifications are
prepared, so now need of incoming material so order is take placed after preparing
bills of materials

b. outgoing products and information

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 Process of distributing product to end user and collecting information

INCOMING PRODUCTS

OUTGOING PRODUCTS

7. Importance of transportation in distribution

Availability of raw materials:

Transportation helps in carrying the raw materials from one place to another place.
Initially raw materials are made at one place and are being transported to another
place for processing and for manufacturing goods.

Availability of goods to the customer:

The goods are being transported from one place to another place. These goods
which are produced at one place are transported to other distant places for their
usage. It flexibly moves the goods from one place to another place.

Helps for bringing nations together:

Transportation on the whole is used for globalization. It brings nations together and it
creates awareness about the cultural activities and even about the industries and
helps a lot for importing and exporting of different goods.

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ACTIVITY

1. Define distributor

2. Discuss 3 roles of distributors

3. Explain 3 types of distributors