What is a Distribution Network in Logistics?

A Distribution Network in the logistics field is an organized structure that enables to bring goods and services from their place of production to their final destination, which is your house or office. When using a distribution network you have various alternatives for transport. The following are available: ship, rail, truck, air mail and courier. By combining these different options it is possible to carry the product or service quickly, economically and accurately from your place of production to the place where you are.

There are primarily three types of distribution networks: manufacturer-based, retailer-based and consumer-based. A manufacturer based network is a structure that centers on one company that owns its own factories and ships products directly to the retail stores. In a retailer based system is a classic structure with many specialized retailers who buy products from the manufacturers and sell them to the consumer. A consumer-based network focuses on selling products directly to the customer, rather than through intermediaries such as retailers or wholesalers.

A distribution network processes are any activities involved in moving goods and services, from the point where they are made or acquired to the point where they are used. These processes may be performed by a company itself or through another party. The distribution network therefore has several characteristics that ensure its success.

The great strength of a distribution network is, as already mentioned earlier in this article, the ability to combine many different alternatives for transport, resulting in the lowest possible delivery time of the product or service. This is what makes it so beneficial for both parties involved: you as the producer and your customer. Distribution networks may either be private or publicly owned, but are often operated by intermediaries such as wholesalers, retailers or commission agents. There are no restrictions as to the size of a distribution network and there are many distribution networks that operate on an international scale. In the Netherlands, for instance, you can find a number of multinational distribution networks operating.
The primary benefit that comes with working with a large-scale distribution network is the ability to deliver products fast and at great distances. This way a producer does not have to worry about the costs related to storage, warehousing and shipping. As such he or she is able to keep down the cost of production and make sure that, eventually, you pay less for your product or service.

A distribution network's ability (or inability) to efficiently bring products from producers to consumers is ultimately a measure of its overall performance. In most cases, consumers do not have access to detailed information about the distribution network that is used for delivering products or services from producers to them. Therefore, it is important that you judge the quality of delivery based on your own experience and if possible talk with people who currently use or have used in the past the distribution network in question. This way you can gain a better insight into its strengths and weaknesses.

A well-designed distribution network will seamlessly deliver your product or service to your customers without causing any delays, additional expenses or other problems that could potentially cause you financial loss. It is important however not to underestimate the importance of proper Quality Control when designing your network.

When designing a new distribution network you should make sure that it provides optimal Quality Control of all the products being delivered to the end user or, in other words, to you. This is necessary because poor quality control will not only result in dissatisfied customers but can even lose you loyalty and customer base and, as such, leads to lower and fewer returns.

The best way to ensure quality control is by following these five steps:
In today's market it is crucial that you become a member of an online transportation network as well, if time is of the essence for you or your customers. Online transportation networks are especially helpful in terms of planning ahead so that you can access the best possible transport options available today, and even make use of spot sales that might be available. This way you can get the goods shipped to your customers as quickly as possible.

Distribution networks will usually refer to any party involved in delivering a product or service from its point of origin until its point of consumption. It therefore does not only include actors such as producers, wholesalers and retailers but also transportation companies such as shipping lines, package couriers and trucking firms.

There are two different types of distribution networks available for you to choose from: private or public. A private distribution network is owned by you or your company whereas a publicly owned one is usually managed by government officials, such as the national postal service. These days more and more governments are entering into partnership with private companies to operate public distribution networks .

Before you decide in which network you want to become a member it is important that you know exactly who owns or manages it. This way you will be able to make sure that both your needs and the interests of the owner or manager are being addressed appropriately and that your product is delivered as speedily and efficiently as possible.

Knowing whether a distribution network is private or public will also help you make an educated decision on its overall quality. A private distribution network will usually tend to be more efficient than a public one simply because it has been designed with the specific interests of its members in mind. Publicly owned distribution networks on the other hand usually suffer from lagging behind when it comes to adaptability since they have to comply with a multitude of different regulations and laws that may be difficult or even impossible for them to implement effectively.

The first step towards improving your current distribution network is to analyze it. This step should be completed by you or your company since only you have the necessary knowledge and experience to identify its strengths and weaknesses.

Step 2 is essential for identifying how to improve your current network. When trying to find solutions you should always take each element of the distribution channel separately, starting with either the manufacturer, wholesaler or retailer. This will allow you to identify which areas of improvement are the most urgent and thus where your time and money should be spent first.

The 3rd step is all about research and introducing a pilot project . Researching new technologies, solutions and business models may help improve the performance of your current distribution network significantly. Pilot projects on the other hand are useful for testing new solutions and ideas, giving you valuable information on how to improve your current network.

The 4th step is all about implementation, making use of what you have researched in order to optimize your entire distribution channel . You should always check whether the places where your goods will be stored or processed can be improved upon as well.

Step 5 is also one of the most important ones, simply because it deals with ensuring that your brand will be upheld. You should always make sure that your customers can rely on a reliable and efficient distribution network to deliver their goods safely and quickly. Integrating new technologies might increase customer satisfaction by allowing them to track their orders online via GPS for instance.

The final step is all about maintaining your distribution network, making sure that it will continue to run smoothly . This can be achieved by putting into place preventive maintenance programs for instance and by following up on your customers’ experiences with the delivery of their goods as well.
In order to remain profitable in the long-term, every distribution network needs to make use of innovative technologies and solutions. Having a reliable, efficient and fast-paced distribution network is essential for the success of your brand in today’s highly competitive business environment.

Distribution networks are often used by companies as a mean to reach potential customers quickly and efficiently . A distribution network usually consists of distributors who handle the delivery of goods from a manufacturer to wholesalers, retailers and even consumers. Even though most distribution networks tend to be rather complex, they are all based on the same basic structure or skeleton. This structure in turn consists of three main elements called tiers . The first tier comprises of various manufacturers who deliver their products directly or through distributors to wholesalers, retailers and even their own customers. The second tier involves wholesalers who take the products from manufacturers and either sell them to retailers or deliver them directly to consumers. Retailers are usually responsible for taking goods from wholesalers in order to market and resell them to consumers. Consumers can also be part of a distribution network as they often receive goods directly from manufacturers and retailers.

The first tier in a distribution network is also known as the channel of distribution, and it consists of all the business partners involved in moving goods from one stage to another . Every individual channel member should be able to trust every other member of their own channel or, put differently, they should rely on a stable and efficient channel. This is exactly what should be achieved when improving a distribution network: making sure that all channels are moving in the same direction and that they form an interconnected chain.

The second tier consists of wholesalers, retailers and consumers who deal with goods after manufacturers have delivered them to distributors . This makes a second layer of business partners necessary in order to make the entire network functional. The importance of this second tier is often underestimated, but a proper distribution channel can only be built on strong connections between every single participant.

The third and final tier includes everyone involved with goods at some stage during their delivery . This could for instance be manufacturers themselves, distributors, wholesalers or retailers . But it can also be consumers who receive goods directly from a manufacturer. This third tier has the most interaction with both channels and their individual business partners, making it very important to focus on improving customer satisfaction as a means to create long-lasting relations.

Modifying your current distribution network should always start at the first tier . Improving your channel of distribution will automatically increase the performance of every single member. Improving the second layer consists mainly of setting clear and steady goals with regards to your customers’ satisfaction. This can be achieved by using industrial operations research (OR) for instance . Maintaining customer loyalty is often a good way to stay ahead in today’s highly competitive business environment.

Additionally, it is wise to improve your third tier . This can be done by making sure that every individual member of the distribution network feels like they are an important part of it. For example: a wholesaler might want to reward loyal customers with discount coupons or free goods for their continued business relationship . An efficient way to make customers feel like they matter is by providing them with a proper loyalty program. This will increase customer satisfaction and might even provide an incentive to come back again, if the company’s prices are competitive enough.

The bottom line is that every member of your distribution network should feel like they are important for your business. Unluckily it is not uncommon for retailers to compete against wholesalers or manufacturers, which is never beneficial for anyone. It will only lead to conflict and decreased customer satisfaction . A good way to avoid this problem is by making sure that every single participant in your channel understands their role in the entire process of delivering goods from one stage to another.

If you want to improve your distribution network, it is essential that you keep your lines of communication open. Communication with all parties involved in the delivery process should be interactive . This will make sure that everyone can rely on each other and trust all business partners in their respective channels to cooperate for mutual benefit.

A good distribution channel knows how important a stable and efficient supply chain is . This is the key to success in business. In order for your entire distribution network to perform at its highest level, it has to be properly optimized . Ensuring this can be done by establishing a good collaboration between all involved parties and optimizing their respective roles within the network.

The same rules apply whether you are talking about internal or external communication. Providing your employees, business partners and support staff with the most up-to-date information is vital for a successful distribution network . They need to know what is going on so that they can react immediately when something goes wrong.

In addition: if you want to maintain customer loyalty it can be wise to keep them updated about any changes you are planning to make in your distribution network. This way they are always aware of what is going on and can react accordingly . A good example of this would be sending out letters or emails when you are planning to change certain products or services .