Question

Distribution and Channel Management

You have been appointed the new distribution manager for Kakamuzi Company Limited, a new entrant in the cement sector in East Africa. Write a 5-page paper summarizing how you intend to carry out the following aspects of distribution and channel management: -

(1) Product and service distribution,

(2) Distribution strategy, and

(3) Channel conflicts

Answer 1

The cement industry is capital intensive and only a few cement companies use state of the art facilities. Cement manufacturing is energy intensive and modern cement plants are highly automated. Cement firms operate in markets closely linked to the economic cycle with a back-forward linkage with many other sectors like energy and transport . The industry plays a significant role in the climate change debate and energy accounts for up to 45 per cent of cement production costs.

Companies need to distribute their cement across the entire nation to ensure they fully exploit target market. The cement companies may also decide to distribute its products to some regions more than others. An expansive dealer and retailer network is also necessary to support and empower the trade partnership so as to cover the potential market fully. A twolayered distribution chain concept that incorporates dealers and manufacturers is more effective.

The responsibility then lies with the dealers who link up with contractors, institutional and government buyers as well as retailers. C&F agents can be hired by companies to transport cement to warehouses for distribution to various clients. Upon reaching the port of entry in the importing country, it is received by the C&F agents to the warehouses and then transported to the dealers/distributors who ensures that the products reach end users in good condition. At times physical ownership of goods is not necessary. Dealers and sub-dealers receive orders from potential customers and forward them to manufacturing companies. They then coordinate and monitor the entire transportation process to ensure goods are delivered to right destinations. Most cement companies utilize distributor networks because they facilitate formation pf partnerships that enable them effectively connect and get in touch with potential customers for their products .

Another advantage of distributor networks is that distributors have enough storage facilities where products can be kept safely. Due to this, they can easily control the supply chain because they get orders directly from the clients. They in a way influence the manufacturer‟s business. Nonetheless, as more players enter the industry competition continues to increase and everyone wants to get large market share. As a result, may cement manufacturers in Kenya are currently implementing innovative strategies that are likely to transform the way cement is distributed in the country and the entire region.

Logistics network design also has a major impact on market share. Perhaps, the logistics network design is needed most by the research to help in finding methods for ascertaining the link between the revenues generated by a company and the level of logistics provided by customer service. Currently, most firms have regarded customer service as a limitation on network design and the costs are being reduced subject to this limitation. Nonetheless, most firms are trying to maximize profits with bot cost and revenue as variables. This is because the customer service level is expected to be at peak due to economic factors. The revenue-service relationship for location models can be conveyed as function of price where price reduces as the distance between customers and their sourcing point increases. Customer order cycle time might be the most appropriate variable for channel simulators. The techniques used for similar problems needs to be researched on. Traders and producers can only effectively provide utility by distributing goods physically. Buyers won‟t acknowledge value for goods until they are placed in a spatial and sequential framework which will provide them the opportunity to enjoy both psychological and physical attributes that are linked to possession. Customer pickups increases with substantial representation. The customer should be notified immediately his order arrives and once the customer arrives to pick up his order, it should be easily identified. Since every customer order involves two stages in the supply chain, order visibility becomes a very important aspect as far as manufacturer storage is concerned. However, in a drop shipping situation, order tracking becomes more challenging to implement because it requires wide-ranging incorporation of information systems at both retailer and manufacturer levels.

Critical factors like improved service delivery, product quality, price effective communication and quality of salesperson in conjunction with effective physical distribution service presents firms with new sales opportunities. Increased sales could lead to gaining of competitive edge and increased efficiencies in distribution. On the other hand, excess delivery time, limited stock and superfluous variation in delivery time and performance can result in loss of sales. Six ways in which companies can reduce their costs and expenses through improved service delivery include: conducting business from the customer‟s perspective, clear definition of service elements, designing after sell service programs developing competitive service package, establishing performance controls and testing their programs on real market (Heiko, 2008).
In markets that are highly competitive, the big fishes in the cement industry are putting some strategic mechanisms in place to enable them provide innovative combinations of high quality products and services. They are also providing integrated solutions that are tailored to the needs of each customer. Such organizations have incorporated innovation in service delivery and have enabled their service capabilities through strategic sharing of information. As such they synchronize business operations like finance and business consultancy to provide long term and sustainable solutions to their customers as a way of increasing customer value (Rajagopal, 2007).
Service delivery is measured in different ways that include order visibility. Order visibility is the customer's ability to follow their order from the time it was placed to delivery. The time between order placement and delivery is known as response time and is used to measure service performance. Product variety can be defined as the number of different configurations or products that are desired by a customer from a particular distribution chain. The likelihood of having a product in stock at the time when customer makes an order is determined by availability. Customer experience has to do with the simplicity with which a customer can effectively place and have his order. Return-ability is the ability of a customer to return any commodity that is unsatisfactory as well as the ability of distribution network to deal with returns of that nature .

Companies that target clients who can withstand longer response time need some locations that are not very close to the clients and can dwell much on increasing capacity of such locations. Companies that target clients with short response time, on the other hand need to be close to their clients. Therefore, as response time reduces, serves to increase the customers‟ desire and in turn the facilities in the network also needs to increase. performed a study on the impact of information sharing on retailers with orders of fixed intervals. He realize that ordering policies that are scheduled have a considerable impact on variation of demand within a supply chain. The study also reveals that the variation in supplier‟s demand depends on the alignment of the orders of retailers. Synchronized orders increase demand variance. Various supply chain objectives can be achieved through good distribution. This is why different distribution networks are selected by firms in the same industry.