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
Business ideas, Marketing and sales , promotions and advertising ideas , articles
Supply Chain Network Design & Contributing Factors
Supply Chain Network Design & Contributing Factors
Designing Supply Chain Network for each industry or business involves arriving at a satisfactory design framework taking into all elements like product, market, process, technology, costs, external environment and factors and their impact besides evaluating alternate scenarios suiting your specific business requirements. No two supply chain designs can be the same. The network design will vary depending upon many factors including location and whether you are looking at national, regional or global business models.
Supply Chain Network in Simple and basic Terms Involves determining following process design:
Procurement
Where are your suppliers
How will you procure raw materials and components
Manufacturing
Where will you locate the factories for manufacturing/assembly
Manufacturing Methodology
Finished Good
Where will you hold inventories, Number of Warehouses, Location of warehouses etc.
How will you distribute to markets – Transportation and Distribution logistics
All above decisions are influenced and driven by Key Driver which is the Customer Fulfillment.
Designing Supply Chain Network involves determining and defining following Elements:
Market Structure
Demand Plotting or Estimation
Market Segment
Procurement Cost
Product /Conversion Costs
Logistics Costs including Inventory holding costs
Over heads
Cost of Sales
Network Design aims to define:
Best fit Procurement model – Buying decision and processes- VMI, JIT, Kanban, procurement cost models etc.
Production processes – One or more number of plants, plant capacity design, Building to order, build to stock etc, in-house manufacturing or outsource manufacturing and related decisions including technology for production.
Manufacturing Facility design – Location, Number of factories, size of unit, time frames for the plant setup project etc.
Finished Goods Supply Chain network – Number of warehouses, location & size of warehouses, inventory flow and volume decisions, transportation.
Sales and Marketing Decisions – Sales Channel and network strategy, Sales pricing and promotions, order management and fulfillment process, service delivery process definitions.
Network Design also examines:
Derives cost estimates for every network element
Examines ways to optimize costs and reduce costs
Extrapolates cost impact over various product lines and all possible permutations and combinations to project profitability
Some of the key factors that affect the supply chain network modeling are:
Government Policies of the Country where plants are to be located.
Political climate
Local culture, availability of skilled / unskilled human resources, industrial relations environment, infrastructural support, energy availability etc.
Taxation policies, Incentives, Subsidies etc across proposed plant location as well as tax structures in different market locations.
Technology infrastructure status.
Foreign investment policy, Foreign Exchange and repatriation Policy and regulations.
Supply Chain Network designs not only provide an operating framework of the entire business to guide the managements, they also examine the structure from strategic view point taking into account external influences, interdependencies of all processes and critically evaluate opportunities to maximize profitability.
Supply Chain Design consultants use various design softwares and optimization techniques coupled with inputs from industry consultants and experts.
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