Distributor Management Systems (DMS) are now a fundamental component in any consumer goods company’s route-to-market. They help manage the supply chain between Manufacturers and a myriad of Distributors by aligning retail activities, trade promotions, inventory, invoicing, claims, competitive insights and much more.

A modern DMS streamlines all distribution workflows and activities, improves supply chain efficiency, eliminates stock outs and overstocking and allows companies to access real time data from distributors. The right solution can bolster sales and distribution activities even in a fragmented marketplace, but let’s examine exactly why it is that they’re so important.

With high-consumption products comes the demand for rapid movement from manufacture to market. To facilitate this, Manufacturers work with Distributor networks, spanning multiple countries and thousands of outlets, to bring their branded product to millions of consumers.

This is a mutually beneficial relationship. It does get complicated, however, by the number of Manufacturers that a Distributor will be working with at any one time (and vice versa). As it becomes increasingly busy, efficient collaboration becomes increasingly difficult.

According to McKinsey in this recent article, “Some problems arise because manufacturers do not fully understand their customers and thus do not deploy resources appropriately. Other issues occur because manufacturers fail to provide distributors with appropriate support and incentives.”

From gathering insights to inform a future Revenue Growth Strategy (RGM) to consistently delivering customer value, a DMS can provide invaluable resources for a Manufacturer.

At a more granular level, some of the issues that can arise before the implementation of a DMS can be seen here:

• Manufacturers find themselves needing to manage huge networks of big & small distributors to get their desired coverage across multiple regions.

• Penetration of rural or generally hard-to-reach areas can necessitate several extra levels in a distribution chain, compounding cost & inefficiency. In these more niche, localised areas, manufacturers may be unfamiliar with distributor operations and thus fail to provide appropriate incentives or support.

• Multi-brand Distributors may have difficulty collating the data that Manufacturers need across the various brands they distribute.

• It swiftly becomes problematic for the Manufacturer to know how much inventory the Distributor is holding vs. how much has actually been sold.

• So, it can be challenging for Manufacturers to manage production with limited data and insight into what’s actually happening in the field.

• The lack of real-time data on orders, inventory, claims and returns could result in stockouts and overstocking.

• With limited insights, it also becomes extremely hard for Manufacturers to effectively manage Trade Promotions through the Distributors, resulting in wasted marketing spend.

There are a number of tangible improvements that come from the implementation of a DMS system. Some will be quickly apparent while others will take longer but have an even larger impact. 

• Control over Distribution Activity: An effective DMS will provide the Manufacturer with control over the Distributor’s MRP, item alteration, ledger alteration, back date entries, negative stocks, reorder levels etc.

• Stock Management: No business should be lost when you utilise a functional DMS platform. Avoid out-of-stock situations through stock tracking as it moves from the Distributor and visibility of damaged vs. undamaged stock. Ensuring there is a minimum amount of stock maintained across sales outlets is essential.
• Sales Team Integration: Intelligent, automated software that integrates with the Sales Team is worth its weight in gold when it comes to keeping track of sales executive visits, tertiary sales, brand visibility, market competition and more. Democratize the data and increase productivity.

• Tangible Achievement and Target Measurement: Seeing the information end-to-end facilitates planning of cohesive sales strategies. The ability to more accurately project and predict growth goals and successes is a real asset of utilising a DMS long-term, and one that is invaluable in today’s ever-changing business landscape.

• Improved Relationships with Distributors: A deeper understanding of data insights from the Manufacturer will lead to clearer expectations. Clearer expectations and removal of uncertain demand fulfilment needs creates stronger business relationships. In addition, understanding of stock replenishment needs supports a more profitable ecology of Distributors.

• Channel Management: Understand the performance of Distributors on an individual level – tracking their sales data delivers clear insights for how the Manufacturer can guide the relationship going forward.
• Time & Energy Re-allocation: The automation of assorted processes (e.g. order processing and communication of Distributor sales in real-time) frees up a lot of time for more productive tasks. Why waste time on follow-ups and liaising when a DMS can do it for you?