A distribution system can be defined as the flow of goods from a producer or supplier to an end consumer. 

The network is made up of storage facilities, warehouses and transportation systems that help move commodities from point A to point B. 

Direct sales or following a retail network are used to ensure that the consumer receives the product from the producer.

Distribution systems vary in form and scale depending on the size of an industry or business. 

Giant companies like Amazon and Apple probably have more advanced and complicated distribution networks and logistics systems.

The most important variables in determining the structure of a distribution network are the end customer’s product demands, customer experience, product variety and availability, response speed as well as product returnability.

Building the Ideal Distribution System

As businesses expand and strive to reach more customers, the distribution system will transform contemporaneously. 

As a result, they must be set up in such a way that long-term optimization is possible. 

Customer demand must be satisfied in order to define the ideal and efficient distribution network and supply chain. 

Also, overall consumer demand must be met at reasonable prices and with exceptional service levels. 

All of these require strategic planning and specialised supply chain management.

All essential services and cost drivers are considered while constructing a distribution network.

1. Customer location 

Customer location is one of the most important drivers for distribution and supply chain modelling. 

Businesses must determine where their clients are located in order to develop an efficient distribution structure that is low in cost and does not have a significant impact on the final product pricing. 

The customer’s location also allows for logistics planning.

2. The quantity and frequency of orders 

The quantity and frequency of orders are also important factors that affect the cost drivers. 

Knowing the order frequency and the volume of purchase by consumers is critical for a business. It certainly helps with inventory management and delivery.

3. The cost and the mode of transportation 

Distribution systems are also important drivers to consider when developing a distribution plan.

By identifying order frequency and consumer location, they assist in determining the appropriate mode of transportation as well as the expenses associated with the selected modes and vehicles.

4. Warehousing

Additionally, warehousing is also a critical component of a well-designed distribution system. 

To ensure that the correct selection is made to best suit the distribution demands and achieve total customer satisfaction, the business must assess the ideal warehouse locations, size, ease of access and costs involved.

It is also essential for businesses to identify points of entry in circumstances where items are being exported or imported.

Locations of factories and suppliers, as well as service level requirements are some of the other key drivers to be included.

Distribution Systems Advantages 

Direct distribution or indirect distribution are the two options available to a company. 

Direct distribution is when a manufacturer sells directly to the end customer, whereas indirect distribution is when a company sets up or joins an existing distribution network, which usually includes warehousing and other services.

The following are some of the advantages of utilising existing distribution system or setting up a new one:

1. Cost savings

For certain organisations and manufacturers, establishing a new distribution point could be costly. 

An existing distribution network delivers speed and convenience while also increasing product reach (geographically). 

It removes the costs and challenges involved with time, human resources and capital requirements. 

2. Larger customer reach

Because it should ideally improve the pace at which items reach the end consumer and opens up options to reach other geographic areas, an efficient distribution system allows for wider customer reach. 

3. Efficiency

Managing a distributed system is more efficient than a single system. 

This is because each particular party involved could work independently to solve problems. 

By doing this, it is not only efficient for problem solving, but it also saves time significantly. 

4. Visibility

A distributed system enhances visibility (or transparency) can be classified into several categories such as: 

a) Access transparency 

Access transparency is very important and discreet to the users. 

They should be unaware of the file’s distribution. or specifically the physical location. 

Therefore, the workers have to ensure that the files are available to be accessed. 

b) Performance transparency

Did you know that a distributed system can be configured? 

Yes, you can do that. It helps to improve the performance, however, it should be visible to those who are using the system.

KATSys™ – The Best Distribution Management System

In the physical distribution of mobile prepaid cards in our early days more than 20 years ago, there was a massive amount of work and learning on the go.

It was a new and revolutionary mobile service that was rapidly spreading on a global scale in the early 2000s. 

To register dealers as prepaid touch points, KAT’s small team had to comb the streets on foot.

To handle the ever-increasing transaction volume, our founder’s entrepreneurial drive to ride the prepaid service growth wave steadily led to positive changes.

KATSys™ is now a full-featured distribution management system with tracking, handling, reporting and data mining capabilities – making it ideal for businesses dealing with high-volume, fast-moving commodities. 

KATSys™ is the epitome of the ambition to be the best, where invention is the culture, transparency and management of operations are keys to success and optimising business profitability is communicated like a heartbeat across the supply chain. 

The daily distribution operations are all about efficiency, efficacy, quantification and accuracy.

We have a mandate to deliver absolute visibility, openness, and security across the supply chain for all of our clients through digital solutions. 

With that in mind, we will continuously strive to become the preferred solutions partner regionally by 2025 and worldwide by 2030.

If you are on the same page with us, get in touch now!