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Addressing the Risks of Distribution management system Consumer Goods.

Today, FMCG consumer goods distribution system has been widely applied and become popular with many Enterprises. However, difficulties encountered by enterprises are quite significant from production, sales to management. How to prevent the risks in distribution? This is a question that many Enterprises are struggling to find the answer.

1. The biggest risk that Distribution management system Consumer Goods are concerned about is inventory.

Enterprises fail to control inventory level at the Distributor and stores. Enterprises are not active in supplying and consuming goods in the market. They have no control over where the goods are located in their supply chain. This could lead to high inventory levels. Enterprises can not collect their capital, which affects the production and operation processes.

2. Out of stock is the second risk in the distribution process of Enterprises.

Out-of-stock creates a feeling of discomfort for customers and is also a reason to push customers to competitors, because customers will not wait for enterprises but tend to use alternative products. There have been a lot of businesses rush into offering promotion campaigns, but when customers come to seek for products and there isn’t any, enterprises will lose a significant number of visitors and fail to carry out further promotions.

Besides, “out-of-stock” problem is caused by the fact that enterprisers do not measure and forecast market demand, understand product coverage, distribution strategy is not optimized, lack of control measures, and company operation and control process are inaccurate

3. Risk related to salespersons:

This is the core resource of the company. Distribution will be difficult if the company does not have strict management procedures, especially for those operating on national scale with a large number of salespersons. How to know how many employees are actually working? Does the sales team perform at 100% of their capabilities or better? Are employees provided with full follow-up or coaching (Sales Coaching) skills?

Management will usually be based on sales targets, but this is not enough, as “cooking data” problem is quite common. Lack of management tools will lead to employees’ failure to maximize their performance and efforts to exploit the market, etc.

4. Risk in price and promotion budget control

It is important to have a stable distribution system for building a consistent selling price in the market. Avoid cases of price competition among distributors that may affect the market.

Promotion budget is significant, but its effect is not high due to the poorly generated negative results, causing budget waste and loss. Fail to control complex promotion programs, budget is allocated to different regions, end-of-program claims are not properly followed up to determine if items are delivered to end users, etc.

5. Risks of competition:

With current fierce competition market, in addition to good products, good price and good market, enterprises have to pay attention to good distribution system management to ensure good market coverage and understand customers’ needs and preferences.

Investing and changing management mindset is essential in this “race” to gain over market share in this industry. At present, there are solutions on the market to improve the efficiency of distribution system management. Distributors can use distribution management system (DMS) solutions to manage the inventory, sales, orders, budget, and promotional programs, etc., help distributors save time, and improve the productivity and efficiency.

Major companies from world leading brands such as Johnson & Johnson, P&G, Kao, etc. have found a solution to manage their distribution system so that they can survive and strengthen their competitive position in the consumer goods market.

Please refer to our distribution management system solution to find effective enterprise management tools for your business.

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