Business Intelligence System: The Science of Distribution Management

Posted by D&V Accounting Services

Aug 5, 2014 1:49:00 PM


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The distribution system refers to the supply and distribution of information purely through the Internet, linked to provide a new model for the business and trading partners.

Suppliers, branch offices, and distributors can be reached in real time to submit a business document, query, product supply, and inventory status. In addition, distribution systems allow access to markets, sales information, and customer support, suppliers, end to end of branches, and dealers supply chain management, effectively shortening the supply and marketing chain.

The new model, with the help of the Internet, has improved business processes. Business processes are no longer restricted by time, place, and personnel. The efficiency of enterprises and business scopes has been effectively improved.

In addition, enterprises can now be aligned with existing business models and existing infrastructure of the Internet era, the rapid build B2B e-commerce platform, expansion of existing services and marketing capabilities to achieve zero-risk inventories. This greatly reduces distribution costs and increases turnover efficiency to ensure companies are one step ahead and have competitive advantage.

Elements of Distribution

Distribution systems in distribution management include six elements, also known as "channels for six C". The analysis of these six "Cs" is the basis of the distribution system.

  1. Cost
  2. Capital
  3. Control
  4. Market Coverage
  5. Features (Character)
  6. Continuity

Cost

Cost is the first to consider in the development of distribution strategy. The cost of distribution system consists of two parts: First, the development costs; this includes fixed investment in equipment, and research expenses. Second is to maintain the cost, including equipment rentals, vehicle fuel consumption, staff wages and other variable costs. Some system developments have low costs but have high maintenance overheads. For others, it is the early stages of development that require huge investments, while the post-maintenance costs are very low. The process of selecting the distribution system should a balance of these two costs from the perspective of long-term development.

Capital

Another important factor in the distribution system is to consider the different ways of funding requirements and cash flow. For example, when a company establishing its own distribution system, this generally requires substantial capital investment; cash flow for products usually does not require middlemen distributors, often requiring subsidies at the beginning.

Control

Control refers to the ability to manage the distribution channels. This allows the company to better supervise the sales staff to understand the changes in market demand, and thus a more effective way to sell their products and services.

Despite the large investment, enterprises set up their own distribution system to ensure control of the company's distribution channels. To strengthen the control, enterprises are advised to shorten the distribution channel of which depends on the company's financial viability and management capacity.

Market Coverage

The three-tier market coverage goals: [1] to achieve the target sales, [2] reach the target market share and [3] to achieve a satisfactory market penetration. There are instances when companies are unable achieve the three-tier goal. Companies need to prioritize these three goals and clarify which one is the most important for the long-term development of the company's core objectives. For example, when considering channels and limited funding, some companies in the actual marketing process do not require taking into account all of the market to strengthen market penetration.

Features (Character)

Features mentioned include corporate identity and target market characteristics. The former is mainly the nature of the product. Physical properties, technical content, in addition to products other than those associated with the company, such as the company's size, reputation and financial status. These properties determine the company's suitability for the type of channel sales. The target market characteristics include customer characteristics, the middlemen features, and competitor characteristics. If the customer shows a low frequency of purchase, the company should adopt long distribution channels. Brokers, whether the burden of storage and transportation costs, and advertising costs and other factors should also be taken into account. In addition, to determine the company's own channel strategy, they should consider their competitors.

Continuity

Continuity is the life of the distribution channels; to choose which method of distribution to apply in order to ensure the smooth flow of the sales channels and its stability. In order to avoid the interruption of distribution channels, the company must establish excellent branding, and to prevent middlemen from turning to other enterprises.

Distribution of Management Information

Distribution management platforms for enterprises were created in consideration of the complexity of the apparel industry operations. It focuses on the hands of sales and inventory data, using flexible and diversified marketing strategies, reducing administrative costs to protect the largest corporate profit. For garment enterprises, centralized management and control can be strengthened to enhance enterprise-wide collaboration capabilities, strengthening the control of the enterprise resource allocation and sales coordination, thereby preventing risks, to help enterprises improve efficiency, reduce costs, and standardize management.

Necessity of management information:

  1. Highly competitive, low-profit margins of small and medium-sized clothing and shoes trend, the cost is not dominant.
  2. Various aspects of inter-departmental form well-coordinated and overall management integration.
  3. Data can be impossible to collect, let alone its analysis, resulting in blindness of market decision-making.
  4. Input costs of information management systems and maintenance.
  5. Inventory, terminal sales, logistics, etc. aspects of the opaque losses.


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