5 Critical Distribution Management System Challenges to Overcome

How do consumer goods travel from the manufacturing plant to the shelf? The route-to-market (RTM) solution is the answer. An effective RTM solution focuses on the consumer as well as the strategic goals of the business. With long-term and short-term goals in mind, RTM solutions provide CPGs the flexibility to modify and support their distribution operations and processes.

A Distributor Management System (DMS) is fundamental to a consumer goods company’s route-to-market strategy, and it has become ubiquitous over the last few years as companies go digital. But data shows that only 30% of all digital transformations are successful. Then, what makes the rest 70% fail? Let us understand the challenges faced while adopting a cloud DMS solution and what to avoid.

What Not to Have in a Distribution Management System

Lagging Stock View

Inventory Management is essential to succeeding in the consumer goods supply chain, and you can effectively manage inventories with a Distribution Management System that ensures real-time stock tracking. A cloud DMS solution helps large manufacturers and distributors capture order details, manage promotions, and plan strategies to boost revenue generation. A perfect DMS solution for modern distribution operations must have a live inventory management feature that provides a real-time inventory view for companies to gain actionable insights, generate forecasts and stay on top of sales. If your DMS doesn’t support real-time updates to the inventory from the field activities, you will not be able to match pace with volatile market demands.

Augmented reality
Cloud-based Distribution Management System

Ineffective Trade Promotions Management

Consumer Goods companies have to deal with customers who overlook them when they fail to see their regular products on the shelves. They move on to pick up a second choice or pick the brand that gives the best promotions or freebies. The best way to overcome dwindling brand loyalty is by being available on the shelf and all the time. In addition, to this having an optimized Trade Promotions strategy built into the distribution management system helps with planning and managing your promotional campaigns.

Your DMS should offer the most advanced capabilities to manage discounts and promotions on the shelf, with insights derived from past campaigns and other relevant sources. In the ever-changing world of consumerism, offering customized promotions to large and small distributors based on sales volumes and order quantities benefits the manufacturers greatly. Manufacturers can generate the best value, provide great incentives and give exclusive discounts that push distributors to continue business with your company.

Omni-channel Order Management Challenges

Managing order taking from across multiple channels for Distributors is a struggle. The inability to track secondary sales down to the lowest level can hamper your distribution operations and increase operating expenses. A Distribution Management system with a data-driven approach helps companies ensure they are readily available across different warehouses, manage and approve order quantities placed by multiple distributors, and seamlessly manage returns or expired products. Each point in the journey provides an opportunity to present a great customer experience, boost retention, and gain revenue. Additional features like Bulk Allocation and SKU swapping ensure that an AI/ML system processes these configurations to ensure that a DMS can automate such trivial tasks helping manufacturers save time processing orders.

Pitfalls in the Distribution Workflow

The age-old business model called for admins and companies to be involved in the manual completion of tasks, thereby complicating the processes involved in the operations of a business. Distribution management software must ensure the automation of tasks that were otherwise manually completed. The perfect DMS solution should improve collaboration between the supervisors and sales teams. A DMS software should have hierarchy-based applications that would help track team performances and KPIs. The workflow approvals require stakeholders to sign off on them at various stages. With digital approval workflows, companies save a lot of time while increasing transparency and improving collaboration in the system.

Inadequate Forecasting

The lack of real-time business data can affect forecasting and influence consumer goods companies’ ability to make informed choices. Forecasting ensures that manufacturers produce the correct quantity of products for a particular season. With effective forecasting, manufacturers save money by reducing the risk of excess stocking at warehouses, limiting the expiration of goods, and helping move products to the shelf faster. Forecasting using advanced AI/ML algorithms that employ historical sales data, demographics, competitor store analysis, and several other parameters is critical to predicting channel sales, route loads, and sales team performance. Consider using a DMS system that uses forecasting to provide SKU recommendations, predicted order quantity, estimated van loads, etc.

The consumer goods domain has embarked on a digital transformation journey where only 30% of companies have managed to succeed effectively. As an enterprise-grade solution, DMS software should be highly customizable to meet every business’s global and local requirements supporting its route-to-market strategy while keeping some of the key features of a modern DMS covered in this blog.

Book a demo with us to understand our offering and features of our Cloud DMS solution for consumer goods.

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