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Logistical Support and Distribution Strategies
Distribution strategies refer to techniques of services/goods dissemination to end customers. Adoption of the ideal distribution technique for one’s organization forms the key when it comes to generating revenue and ensuring client loyalty. Several organizations opt for several distribution techniques to cater to diverse end-customer bases. Logistical aspects have always contributed strategically to the organizational business. Within the context of wholesalers and retailers, such organizations go beyond the areas of transportation and inventory management for including one among the most crucial components of organizational success—location relative to supply sources or end-customer markets. When it comes to producers, logistics is concerned with basic aspects like manufacturing unit location, customer service quality/standards, and raw material sourcing. Of late, business environmental evolution has coerced large as well as small corporations into focusing closely on the link between this function and others (Heskett, 1977).
Key factors in organizational strategy development include governmental regulation, technological advancements, national transport system health, and energy limitations. Several organizations react to such challenges by coming up with competitive approaches partially grounded in concepts like speculation, postponement, differentiation, standardization, and consolidation. In such organizations, managers perform informal or formal logistical audits, reform their systems for offering better support for organizational strategies, and adopt measures for guaranteeing ongoing, long-run opportunity assessment (Heskett, 1977).
Logistics-focused approaches are of significance as well, in large corporations. Consider the example of one among the biggest chemical producers in the world, which replaced its ships lately. The ships were tasked with carrying bulk matter from Caribbean-based manufacturing units to East Coast and Gulf ports, from where they would be transferred to rail cars and barges to be delivered to terminals where client orders are loaded onto containers for their final transport via trucks and trains. Rather than simply replacing its existing ships with advanced versions of an identical design, the organization mentioned above reformed its distribution system and started banking on containers. All this entails decisions with long-run implications. All this entails expensive actions relative to the total organizational size where it is implemented. All this offers an edge over the competition, which, contrary to other strategies such as pricing, cannot easily be duplicated by rival firms (La Londe & Masters, 1994).
Distribution strategies denote techniques of services/goods dissemination to end customers. Adoption of the ideal distribution technique for one’s organization forms the key when it comes to generating revenue and ensuring client loyalty. Several organizations opt for several distribution techniques to cater to diverse end-customer bases. The approach of direct distribution involves manufacturing companies selling/sending their products directly to customers. This technique may be put into practice in multiple ways. Some firms might adopt a more contemporary approach, such as creating a website for customers to buy their goods via the internet. This alternative works well for corporations having a customer base that is at least moderately tech-savvy, is brand loyal, or requires a particular solution for fulfilling its needs (Ma et al., 2011).
Telephone orders or catalogs from the second mode of direct distribution. This strategy might be targeted at older clients or clients in particular sectors accustomed to this mode of order placement. A key consideration when adopting direct distribution approaches is how much investment is needed. For instance, producers must incorporate vehicles, delivery personnel, and warehouses into their portfolios for effective independent goods distribution. While “middleman” is a termed viewed negatively, it is these middlemen that prove valuable in ensuring products reach customers within the context of distribution (Ma et al., 2011).
Indirect distribution approaches integrate…
…the competition as well. It induces companies to assess the ideal means of delivery of its offering to end-users, whether via intermediaries, direct selling, or both strategies combined. Also, it allows companies to identify specific users or geographical areas for targeting their sales, ensuring the ideal application of their efforts (Partida, 2017).
Earlier, considerable regulatory activity within the logistics domain was economical, linked specifically to operating rights and transport rates. Increased support for the economic deregulation of several logistical components has been combined with more regulations that specify noneconomic limitations on varied subjects like housekeeping procedures when maintaining warehouse sanitation standards (with no less than one CEO charged after this law’s passage) to limitations on restrictions on hazardous substance movement. In the future, the focus may increase when it comes to more strategic matters like the legitimacy of particular geographic practices deterring freight-on-board (as against market- or destination-based) pricing. In many cases, the Federal Trade Commission (FTC) has displayed a growing interest in the number of advertised goods stocked supporting special promotions (Li, 2014).
Swift organizational growth masks several flaws, such as operational inefficiencies and ineffective decisions. While individual firms continue rising and falling in the long run, there will generally be lesser opportunities for growth to bank on within the context of a stable population that is concerned ever more about its rate of consumption. This results in a move from focusing on growth as such, to earnings quality, acquired using prudent cost control necessary for serving fairly slower-growing marketing/selling bases. Logistical factors are of considerable significance in initiatives aimed at improving earnings quality. For effective distribution strategy implementation, ensuring it is in line with the company’s general business strategy is imperative. Even if the company is unable to carry out the extensive implementation, bringing the plan in line…
Heskett, J. L. (1977). Logistics-essential to strategy. Harvard Business Review, 55(6), 85-96.
Jenkins, L. (2018). Distribution strategy | Cutting edge distribution strategies 2020. Software Selection Tool | Software Selection Management | SelectHub. https://www.selecthub.com/enterprise-resource-planning/cutting-edge-distribution-strategies/
La Londe, B. J., & Masters, J. M. (1994). Emerging logistics strategies. International journal of physical distribution & logistics management.
Li, X. (2014). Operations management of logistics and supply chain: Issues and directions. Discrete Dynamics in Nature and Society, 2014.
Ma, X., Yin, Y., & Liu, T. (2011, August). The simulation and optimizing of different distribution strategies for the distribution centre based on Flexsim. In 2011 IEEE International Conference on Automation and Logistics (ICAL) (pp. 201-204). IEEE.
Partida, B. (2017, November 14). The right distribution strategy affects logistics performance. Supply Chain Management Review. https://www.scmr.com/article/the_right_distribution_strategy_affects_logistics_performance
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