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A Complete Guide to Distribution Management Systems

Dealer with arms crossed in a store

Distributors are critical stakeholders in a brand’s route-to-market strategy. A strong and reliable distribution network is what allows a brand to reach consumers through retailers or dealers. When a retailer, for example, places an order with the brand, this order is rerouted to the brand’s authorised distributor who takes care of fulfilment. 

The problems that can arise from such a setup is mismanagement of distributors, throughput issues, and even miscommunication among brand-distributor-retailers, leading to lost sales and brand damage. There is also the lack of transparency to consider when it comes to secondary sales where the brand is in the dark about the actual transactions happening between distributor and dealer/retailer. The brand is entirely dependent on what the distributor communicates with them and there is no way to check the veracity of the information. 

Naturally, with all these factors to consider, the need for a holistic, yet easy-to-learn and advanced distribution management system or DMS is strongly advised. 

When properly conceived, a DMS can become the backbone of the entire distribution effort that ultimately puts the products up on retail shelves for consumers. Elements like promotions, inventory management, invoicing, insights, tracking, and more are part of DMS functions. It also allows brands to proactively prevent stock outages and overstocking via real-time data collection from distributors. 

Typically, a DMS has a database for storing information on retailers, etc., along with various tools for analyses, report generation, and inventory management. Among the plethora of benefits that a DMS offers, perhaps the most striking is the ability of real-time monitoring of the entire supply chain from manufacturing to retail. What this does is arm brands with the power to make intelligent and effective decisions on strategizing, resource allocation, and problem solving.

While a DMS is all about streamlining distribution, logistics undeniably plays a crucial role here. But the two, distribution and logistics, are by no means one and the same. We discuss this below.

Distribution vs Logistics

We must understand that distribution and logistics are not interchangeable terms. Although distribution can be construed as a subset of logistics in the fact that they both involve transportation of goods from one point to another, there are some differences to be noticed. 

They are not to be confused with one another. 

While logistics is the comprehensive planning and the holistic processes involved with the transportation of goods, distribution has a greater focus on order fulfilment through a distribution network. 

With logistics, we see elements like (but not limited to): 

  • Fleet management
  • Packaging
  • Temperature regulation/control
  • Supply management 
  • Shipment tracking
  • Delivery route solutions

The focus is entirely on the transportation and ancillary aspects of transportation. 

On the other hand, with distribution channels, there are an army of agents and specialised entities focused on getting the brand’s product to the consumer. 

Successful distribution involves: 

  • Brands
  • Distributors
  • Wholesalers
  • Retailers and/or dealers

As opposed to the straightforward physical transportation of products from one place to another with no other goal in mind, every action or process involved in distribution, from commercial packaging to order fulfilment, has one goal – reaching the consumer.

Challenges to Overcome

Challenges faced by distributors mainly arise from various disruptive factors that can be human, logistical, or product-related. 

From changing market demand to recalls or quality control problems to product returns or order cancellation, the challenges are many that more than necessitate the need for excellent distribution channel management.

Let’s dive into the different challenges that a distributor and/or a brand can encounter while pushing products down the sales hierarchy.

Business challenges encountered by brands: 

  • Secondary sales visibility

Secondary sales is an important aspect of trading where intermediaries are involved to get the product to the consumer. Secondary sales happen between distributor and retailer/dealer, and the data here is commonly opaque to brands. The ramifications can be expensive as brands may miss out on important areas of improvement or issues down the supply chain. For example, it is a grave mistake for brands to assume that once a batch of products have gone out to the retailer or dealer, there are no further worries. Retailers/dealers can return products based on issues like products nearing expiry or broken seals. If brands are accurately informed of this on a timely basis, they can improve their quality check procedures or if need be, rethink their entire strategy.

  • Inadequate fill rate

The amount of products a brand can supply through distributors to retailers depends on consumer demand and stock availability. As such, without the right data, both historical and current, maintaining a steady supply-demand ratio is extremely problematic. For example, if a brand sends out a hundred items to a distributor and half of those go unsold, the brand would need to re-strategize in the next month or quarter. This is only possible when there is actionable data available to go from.

  • Trade scheme efficacy may vary

Trade schemes are designed or formulated by a brand to make their products or a certain section of their products more lucrative for a retailer. Sometimes free products are handed out when retailers buy a certain amount of a certain product and sometimes great discounts are available for retailers. Like all strategies, trade schemes may or may not work every time and visibility on the same would help with strategizing and allow for proactive actions like better schemes or a redo. By getting visibility into the distributors’ billing operations, brands can also ensure that the retailers are billed with the right schemes being applied on their orders.

Challenges experienced by distributors:

A common shortcoming of traditional DMS tools is that they focus on helping the brand in terms of visibility, tracking, and other functions. They barely do much for the distributors, who are responsible for being the channel that gets the brand’s products to retailers’ shelves. There is no visibility for the distributors when it comes to checking the orders placed with the brand or even tracking the same. Communication also takes a hit.

This is one of the primary reasons for distributors not putting much stock in distribution management systems; the result could be a strained brand-distributor relationship.

DMS Challenges:

  • Deployment

You can’t always deploy something that there is no need for. As a brand, you may have purchased a well-envisioned DMS with all the functionalities and capabilities you need. But many of your distributors might already be using a DMS they trust, using an accounting system such as Tally as their distribution software, or your DMS may not be able to integrate with their systems. 

  • Scalability

Technology and businesses are always in flux. Trends change, new concepts are introduced, and business goals vary with time. Uncertainty like that requires you to have a DMS that is easily scalable for the future as opposed to rigid architectures where you have to accommodate new features or business verticals by re-developing the application from the ground up.

  • Adoption

The biggest roadblock to adopting a new software is the value it offers to the user/purchaser. Distributors believe that a DMS is brand-focused and all benefits with it are for the brand. As brands push for visibility on secondary sales, some distributors want to keep to the current status quo because the opacity benefits them in specific ways. For example, consider a trade discount or scheme by the brand that offers the distributor a discount/order for delivering a 1000 items in one order. The distributor may not be able to fulfil the criterion but could underhandedly combine multiple orders into one invoice or bill to reach the requisite number. The distributor could then present this fabricated document to the brand and receive the discount or reward. 

  • Inaccessibility

User friendliness or the lack thereof can make or break an innovation. Same goes for a DMS; it must be designed in a way to enable even beginners to use it seamlessly. A DMS with a cumbersome UI, shabby design, complicated navigation or simply long load/buffer times are all hindrances to a great user experience and would never be the mainstay for successful distribution management. Similarly, many rural distributors may not be able to use a full-fledged desktop DMS as they might be operating from their mobile devices most of the time.

  • Maintenance

A DMS, like any other software is dependent on timely updates and general maintenance efforts to stay in top shape. What this means is that regular patches or bug fixes or simply a feature upgrade must be facilitated whenever possible or on a fixed but frequent schedule to account for growing business needs and cybersecurity. When a DMS fails to do that appropriately, it fails to become a premier or even a relevant solution.

What does a DMS Solve?

  1. Resource and inventory management

Great distribution management systems support resource management with effective deliveries, returns, and payment collection, utilising comprehensive and reliable reports to help with sales goals. The best processes are a mix of man and machine, in that a truly efficient DMS will nudge distributors proactively towards ordering from the brand when their stocks are nearing outage. This saves time, effort, and mitigates strictly human errors. 

When correctly integrated within a supply chain, a modern DMS should eliminate most fill rate and stock issues.

  1. Streamlined order management

It doesn’t take a genius to figure out that effective distribution management leads to effective order management through processes and communication focused on brand goals. This aspect affects the entire supply chain, directly or otherwise, by reducing concerns on delays, unnecessary orders, and lost opportunities.

For example, if a certain order is out for delivery and there is a delay, a DMS should be able to make that evident for all trade partners involved so that a solution can be reached with maximum speed and efficiency.

  1. Strategic promotions and cost

Promotional offers and pricing directly drive sales, both customer and consumer facing. Businesses with foresight will implement them for sure, but with a DMS that can accurately record these and remind/nudge when necessary can lead to more profits and even successful product launches.

A DMS would equip brands with performance data of the product lines/categories and distributors, and also generate custom promotions based on achievable milestones. This motivates distributors to produce better results.

  1. Well-organised payment collection

All the best systems and distribution management in the world is incomplete without an effective payment collection feature. To see the fruits of your labour, or in this case, of your distribution management system, you need to look at revenue and profits. An advanced DMS ensures that payments, payment reminders, invoicing, etc. are well-organised and robust to make things easier for the brand.

  1. Claim management

Claims from distributors such as returns, defective items, reward redemption and more comes with the territory for brands. Naturally, when a brand is able to fulfil them on one single platform and do so with ease, they are able to do a better job at appeasing their channel partners and setting up a long-term relationship with them.

  1. Effective reporting

Reporting is the final piece to the puzzle when you have set up your DMS because without reporting, you don’t have any visibility on what’s going on. A user-friendly interface is crucial in this respect where all relevant data or KPIs are clearly visible and reports are available for download. Ideally, these reports should be neatly segregated in terms of regularity (daily, weekly, monthly, and annually) to help with prediction and goals.

Trends in Distribution management

Trends are ever changing patterns that are dependent on consumer behaviour and affect it at the same time. Ever changing, these are different from fads which are short lived or don’t have a lasting effect. Distribution management is no different and it is smart to keep an eye on current and future trends to anticipate development. 

We discuss some of these in the following points:

  1. Total Connectivity

The single most world-shaking invention of the last century that has slowly but definitely become a part of our lifestyle, seeping into every aspect of our existence is the internet. Connections afforded by the internet have made data-sharing and collaboration all along the supply chain extremely easy and transparent. Seamless communication among brands and distributors through the internet has led to the exchange of business intelligence, further shortening lead and delivery times. With all these abilities at hand, brands are tending towards total visibility of the supply chain to proactively plan for demand, service customers, tracking, and overall inventory monitoring and management.

  1. Scalability and Modularity 

The perfect DMS would function free of a programmer where non-specialized individuals would be able to operate the software or make customisations. A solution that is both scalable and modular.

We further break this down below.

  • Scalability

Every business has unique needs and a unique structure and this makes customizations more of a necessity than an afterthought. When a software is easily customizable, it offers extreme ease of use to a brand because they are able to play around with the KPIs and features best suited to them. The trend at play makes it necessary for a DMS to be highly scalable and also adaptable to changing technologies. As mentioned already, distributors or brands want more power in terms of operability and making changes; any DMS that encourages this without the technical need to change the source code will be successful into the future.

  • Modularity

The traditional hardware-first companies or older software architecture find it hard to compete with modular software designs today because modularity allows the software functions to be independent of each other. This leads to tremendous user flexibility. A brand can choose what they need and add it to their interface while leaving out the rest. This allows for incredible simplicity combined with incredible precision.

  1. SaaS Supremacy

Companies are going the SaaS way because it offers them relief from worrying about going obsolete, scalability, business continuity plans, and maintenance. Also, SaaS products undergo frequent updates and this helps the platform to stay relevant in the market. Updates Furthermore, businesses can benefit from timely updates; there are generally three kinds of updates – frequent (random and everyday), scheduled (on a set schedule on a weekly or monthly basis), and hybrid (quick updates mixed with rarer feature releases).

  1. Go With The Data

Growth and improvement depends upon acquiring and utilising correct data. It helps improve existing distribution processes while laying down a better foundation for the future. Data offers useful insights to companies and tools that provide data in different formats at the click of a button or two are on the rise. A DMS could, for example, display critical data on finances, available stock, and/or a detailed view of the supply chain. Organisations that are data-oriented are more likely to detect and fix small vulnerabilities before they become huge liabilities in the future. 

What Makes A DMS Effective?

Distribution management is conceptually dependent on the distribution of goods from point of origin to the retailer or dealer in a timely and effective manner. Order fulfilment as opposed to just transportation. To accomplish this, sales and distribution professionals must understand the market and the product they are responsible for. 

As a brand owner, you may know that effective distribution management is an integral part of getting your products sold but here is why:

  • It makes sure that there is sufficient stock available whenever customers or consumers are in need of your product. There is no delay and supply always meets demand. 
  • You reach more and more consumers with the right system in place and access to numerous channel partners. 
  • You save a ton of money with slashed inventory costs and the most cost-effective transportation.
  • You also ensure happy retailers through on-time delivery of intact products.

A distribution management system that works for you will offer the following strategic upgrades:

  • Provide practical goal measurement

A clear view of the supply chain and end-to-end processes assures the creation of sales strategies that produce great results. Seeing the information end-to-end facilitates planning of cohesive sales strategies. When you are able to predict growth opportunities by using a DMS, you all but ensure success for your brand.

  • Manage your channels adequately

When you are able to see the individual stats of distributors and how they are doing in terms of order fulfilment, inventory and more, you will be more clear on how to sustain and push forward your relationship with them.

  • Efficiently manage time and effort

Automation is just a spoke in the wheel called progress and for a DMS, this means that it will save a lot of time and energy with communication and order fulfilment, so that you can take care of other crucial tasks.

BeatRoute’s DMS for You

As a goal-driven sales enablement platform with outstanding scalability and a modular design, BeatRoute is made for collaboration in both primary and secondary sales efforts. BeatRoute DMS is zero-code software, which means it allows for quick deployments and enables drag-and-drop configurability without involving any programming efforts. You can potentially scale it up or down as much as you need. You can also choose what features you want to add to your BeatRoute DMS as our platform is also modular; you don’t need to have what you don’t need.

BeatRoute DMS enables distributors to place digital orders, track order delivery, and view account statements – all to make life easier for them and promote ease of use. 

With multiple interface options, our DMS is designed to allow all distributors, irrespective of their preference for a desktop or a mobile device, to readily adopt it. The Tally plugin is a gem of a feature that is targeted at those distributors who are already using Tally as their distribution or accounting software and are unlikely to switch to another DMS. 

If a brand uses our field sales app, then there is a smooth and efficient flow of data between it and the DMS. However, even in case the brand is using another field sales app, BeatRoute’s DMS can seamlessly integrate with it and result in the same easy data flow as in the previous case. 

You will also find BeatRoute DMS to be helpful with detecting retail landscape issues for better strategizing towards your sales goals. Completely web-based and devoid of any batch synchronisation or data backup issues common to some DMS, BeatRoute comes with out-of-the-box integration with Tally. This helps brands to easily connect to the customer’s Tally accounting system to accelerate reimbursements and potentially maximise sales. 

All in all, with BeatRoute, you get:

  • A complete B2B eCommerce solution that digitalises the business between the brand and the distributors. This includes:
  • A flexible scheme engine
  • Auto-application of relevant schemes
  • Rapid and unambiguous claim approval
  • Returns management
  • Complete inventory visibility
  • Primary sales insights by sales managers for meaningful engagement
  • …and more!

Wondering how to choose the distribution management system that’s right for you? Read this.

Also get a free demo of how our DMS works!

About the Author

Soham Chakraborty

Soham Chakraborty

Apart from being a Senior Content Writer at BeatRoute, Soham is an avid reader of science fiction and suspense novels (Doyle, Christie, Brown or anybody great!) He also dabbles in historical narratives and wonders about our place in the universe. Cosmic viewpoints, Carl Sagan, and Neil deGrasse Tyson intrigues him. When not reading, you may find him spending his weekends or after-work hours watching a fulfilling movie with his family. He also loves travelling to the hills and being inspired like no city ever could. But more than anything, his greatest dream is publishing his own novel someday!

About the Author

Soham Chakraborty

Soham Chakraborty

Apart from being a Senior Content Writer at BeatRoute, Soham is an avid reader of science fiction and suspense novels (Doyle, Christie, Brown or anybody great!) He also dabbles in historical narratives and wonders about our place in the universe. Cosmic viewpoints, Carl Sagan, and Neil deGrasse Tyson intrigues him. When not reading, you may find him spending his weekends or after-work hours watching a fulfilling movie with his family. He also loves travelling to the hills and being inspired like no city ever could. But more than anything, his greatest dream is publishing his own novel someday!

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