Sales channels to reach your customers
Selling through retailers, wholesalers and other distributors
Selling through an intermediary may be a more cost-effective way of reaching your end-customers than selling to them directly.
If you are targeting business customers who prefer to deal with large suppliers, selling directly to them may not be a realistic option. Instead, you might aim to supply wholesalers who have existing relationships with those businesses.
If individual consumers buy low value quantities of your products, the best option might be to target retailers that sell similar products. Or you might choose to focus your efforts on a relatively small number of wholesalers who can in turn supply your products to many retailers.
Other distribution channels may also reach your end-customers. For example, technology suppliers often sell to resellers who can configure and install the technology to suit end-users’ particular needs.
Managing your distributors
You need distributors who will value your product. If they sell competing products, what will make them push yours?
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Think about how you set your prices. Distributors will be more enthusiastic if they can make a large profit – but setting too low a price will eat into your own margins.
Effective advertising and promotions can be vital. As well as marketing to the distributor, you can promote your products directly to end-customers. Distributors will be keener to stock and sell products that their customers are asking for.
The key terms of the supply relationship should be covered in a written contract. Key issues might include:
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how much stock the distributor will hold
what the distributor will do to promote your products
how quickly you can resupply and minimum order levels
whether the distributor has exclusive rights to your product (for example, in a particular territory)
what happens if either you or the distributor want to end the relationship
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Selecting 3PL Service Provider for Warehouse Management
Selecting 3PL Service Provider for Warehouse Management
Global business models are rapidly changing. Shorter life cycles of products and new business need exert pressure on Supply Chain managers to keep pace with the new scenarios. They are often faced with the target to reduce logistical costs and establish new supply networks.
It has now become a common practice to outsource all logistical activities to third party vendors both in procurement side of logistics as well as finished goods, spare parts and reverse logistics areas too.
Today the 3PL service providers market is filled with players of all sizes and competencies, from single owner driven local service provider to multi national companies. Most of the companies have traditionally been transporters or freight forwarders and over the years have acquired warehousing and contract management capabilities keeping in line with the growing needs.
Selecting a 3PL service provider to provide warehousing services needs careful considerations on the part of the SCM manager responsible for the decision. The right partner selection is important because you are handing over the companies assets to someone elses custody and secondly any performance hindrance can seriously affect the sales and revenues of the company in case of FG Supply chain or effect the plant production in case of Raw Material supplies.
Size of company, Structure & Responsiveness
The business volumes and size of the project will determine the selection of the Service Provider. Most of the Multi National Companies can offer integrated logistics services to manage the entire supply chain including freight, transportation and warehousing; you will also find companies at regional or local levels that offer warehousing as a core competency area.
The size of the company is important as a key parameter as one would not want to deal with a small company that does not have the capability to invest or a fly by night operator. The Management structure of the company holds a clue to their focus on the various businesses and customers. This will enable you to find out the kind of management focus that the service provider has in warehousing or CL as a product.
A multi national company being able to invest into your business does not necessarily make the best choice. They can more often turn out to be expensive. Besides the availability of CL expertise in another location or country does not necessarily ensure competence locally. However Multi nationals are preferred as partners most of the times due to many other advantages like integrated services, global standards, ability to invest, etc.
Responsiveness measures the quality and speed with which the service provider company responds to your bid request and engages with you to offer a solution. The nature of response and interaction hold key to the companys culture and enables us to evaluate options of investing into a relationship or partnership possibility.
Technical & Operational competency of Vendor
A vendor should be able to demonstrate the competency regarding its experience in managing functions for other customers and products. Besides the competency can be demonstrated and seen in the solution building process or document prepared and presented by the vendor.
A company with experience in managing distribution center operations would have the team comprising of people with sufficient experience in the operations at management level, supervisory and staff levels.
The company needs have to have a strong IT management and functional operational competence and capability in managing the IT system at site as well as being able to support the site with IT administration at management level.
Service providers interest and attitude towards your business proposal
The capability, interest and attitude of the vendor would help you to choose the vendor who is interested in your business with long term prospect and is willing to invest time, money and effort and not somebody who is chasing business as a sales target and doesnt have the required interest, organizational and operational capability to service your business.
Lastly the cost drivers play a major role in vendor selection for the project. An RFQ document should seek information on above criteria from the vendor, and the process of selection should be based on evaluation, demonstration coupled with site visits to vendors site to assess overall suitability.
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