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10.7. Functional Excellence In Distribution Planning

Companies must draw separate plans for the distribution resources and distribution requirements. It is beneficial for two reasons. Firstly, such planning yields excellent results in a given supply chain from manufacturers to the customers for replenishing products in time and secondly the traditional logistic chain can be modified by way of building linkages and quick responses for continuous replenishment of stock and keeping the channel partnership intact. The continuous replenishment helps the companies in shifting the administrative burden for inventory management and replenishment at the customer's warehouse back to the manufacturer. This however, involves higher transportation costs but also offers benefits to the manufacturer. The companies should look for the following three approaches for quick replenishment of the goods to the outlets:

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  • Customer specified approach that may be followed by the companies as the simplest tool in the process of stock replenishment process. The customers may be asked to provide minimum and maximum inventory re-order at the points of convenience and its periodicity.
  • Manufacturer may alternatively maintain more active management of customer inventory levels, generally using classic re-ordering indicating the point of convenience and its frequency.
  • Channel distribution planning is the most comprehensive approach for continuous replenishment. It involves setting up each of the company's customer warehouses as nodal points in the distribution planning system and activating the replenishment to these nodes.

Warehousing function is one of the important activities in the distribution management. The companies must decide on a desirable number of stocking locations. The increase in number of outlets should not slow down the process of distribution. The number of stocking locations must strike a balance between customer-service levels and distribution costs. The supply chain management has been an integrated component of the implementation, control and evaluation of the marketing program in the companies. Today, with lean and healthy operations as their foundation, progressive companies are focusing intensely on growing revenues, thereby breaking the downsizing death spiral. Instead of merely striving to meet annual cost-reduction targets, managers at these leading companies are repositioning the supply chain as an enabler of growth. Logistics professionals played key roles in improving the cost competitiveness of their operations across the supply chain by adopting new strategies, closing warehouses, trimming inventories, outsourcing non-essential services, and installing powerful forecasting and material-control systems. Successful growth companies often follow one or more of three key growth strategies: customer franchise management, new product development, and channel management. Each of these growth strategies depends on supply chain innovations.

Logistics and the supply chain management is an art of management of flow of materials and products from the source of production to the end user. As a primary interface point with the customer, supply chain management can offer value in the form of competitively superior delivery and value-added services, as defined by customers. In this way, the value foundation translates to customer-service excellence. In parallel with the downsizing and engineering efforts of the past decade, customer service re-emerged as a key management priority for a wide range of manufacturers. But for many companies, meeting basic service requirements and achieving customer satisfaction are still the primary goals. The integrated concept to manage the supply chain is proving to be analytical and able to transcend internal operational problems. The implementations of the integrated pipeline of the logistics variables help achieve a quantum leap in functional integration and operational effectiveness. Companies such as Procter & Gamble and Newell, both manufacturers of a variety of consumer products, understood early on the growth ambitions and strategies of Wal-Mart. By tailoring their logistics to support the retailer’s growth, they have grown as well. Notably, a major component of Wal-Mart's growth strategy has been superior economics, including a low-cost, highly efficient merchandise supply chain. The retailer backs up this strategy with significant investments in state-of-the-art logistics, information systems, and communications technology.

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