What is distribution channel management? Benefits and effective management

Distribution channels are an important foundation in production, significantly affecting the long-term development of the business. Good distribution channel management helps to move inventory effectively. Please read the article below with 1C Vietnam to better understand the concept, benefits and ways to manage distribution channels .

1. What is distribution channel management?

Distribution channel management is the process of monitoring and optimizing the movement of goods from suppliers to final customers through activities such as supplier selection, packaging, transportation, inventory storage, supply chain management,... The goal of distribution channel management is that products are delivered on time, product quality is guaranteed, and operational efficiency is high.

Managing the distribution channel system brings many values to businesses such as reducing transportation costs, faster delivery, reducing inventory, etc. In particular, effective distribution channel management helps businesses Forecast future demand to come up with the best import plan.

The challenge for distribution channels is interruptions due to natural disasters, epidemics, political instability, economic recession, etc. This will have a significant impact on the business activities of enterprises. and directly affects the distribution channel management process.

2. Benefits of distribution system management for businesses

Distribution channel management plays an important role in optimizing the transportation and distribution of products from the source to the final customer. Below are some of the main benefits that distribution management brings to businesses:

2.1. Make quick deliveries

Good distribution system management helps businesses ensure that products are transferred from the source to the customer quickly, from picking, packaging, ordering to shipping. Businesses can easily transfer inventory from distribution channels in a reasonable manner, helping to monitor the quantity of goods in stock and speed up delivery times.

Optimal and scientific warehouse design can help businesses control problems that arise during the delivery process, and building a warehouse in a reasonable location also helps deliver goods faster.

2.2. Meet customer expectations

Managing the distribution channel system helps increase the ability to transport goods from distributors to end customers on time as committed. This is a good start to make customers feel satisfied and trust the service that the business provides.

Effective management of distribution activities also helps businesses ensure the availability of goods. From there, businesses can provide products in the right quantities according to customers' needs, helping to increase customers' purchasing ability.

In addition, businesses can save on shipping, storage and order processing costs. These costs help businesses compete on price and focus on improving service quality, helping to increase customer satisfaction.

2.3. Respond to market seasonality

For products sold seasonally, timely distribution is critical to sales revenue. To increase profits, businesses not only need to manage the distribution process but also collect sales data over specific periods of time to determine the amount of inventory available, thereby making forecasts. future needs.

Managers can also easily predict seasonal market changes from previous experience, such as fluctuations in seasonal orders, to adjust inventory levels and allocate inventory most appropriately. .

2.4. Increase business profits

Businesses can save a large amount of costs such as operating costs, transportation costs, warehousing costs, etc. through collecting complete detailed information about the operations of each distribution channel. The inventory management process is also optimized and there is effective inventory rotation. These are important factors that help businesses ensure higher profits in the future.

3. How to effectively manage distribution channels

Effective distribution channel management is an important part of a business's marketing and business strategy. Here are some ways to manage distribution channels optimally and effectively:

• Understand customers and markets: To manage distribution channels well, businesses need to clearly understand customers' needs, desires and behaviors. From there, businesses can determine the most suitable distribution channel to reach target customers.
• Determine the goals of each distribution channel: Managers need to determine the specific goals of using each distribution channel, such as increasing sales, expanding markets, improving performance or providing better customer service.
• Create a detailed plan to manage each channel: Businesses need to build a detailed plan, including all products sold, target markets and available resources. Administrators should also evaluate and review distribution channels to optimize the appropriate sales process, including both online and offline channels.
• Building relationships with partners: Businesses need to establish strong relationships with partners in the distribution channel system based on trust, fairness and mutual benefit. This helps increase efficiency and better coordinate activities to achieve set goals.
• Evaluate and optimize channels: Businesses need to continuously evaluate the performance of distribution channels including adjusting appropriate plans, changing partners, or market approaches.
• Use smart management software: Businesses should use software to track and manage distribution channels . Thereby, businesses can collect data and analyze to have a clearer view of each channel's activity and how to improve performance.

Thus, distribution channel management plays an important role in increasing working efficiency, delivering goods on schedule, meeting customer expectations and optimizing processes to increase profits for businesses. With the development of technology, businesses can apply distribution channel management software such as 1C:Company Management software. In addition to the modules on sales management, purchasing, finance, etc., the software also provides powerful features to help manage the distribution channel system effectively. Contact 1C Vietnam for consulting support on solutions suitable for your business!