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NIOS Class 10 Warehouse Principles & Inventory Management Chapter 19 Factors Determining Distribution Process
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Factors Determining Distribution Process
Chapter: 19
Intext Questions 19.1
(i) A ______ can be seen as the flow of cargoes from a manufacturer to a final customer.
Ans: Distribution.
(ii) One of the most significant drivers for the supply and distribution chain model is ________ location.
Ans: Consumer.
(iii) Based on the size of an organisation, they ____ may differ.
Ans: Distribution.
(iv) The place of the ______ permits for logistics planning.
Ans: Consumer.
Intext Questions 19.2
(i) ________ supply is a direct mode of sale from the producer to the final consumer.
Ans: Direct.
(ii) The _____________ supply consists of linking towards an existing supply system.
Ans: Indirect.
(iii) Organisations can attain price-reduction and ____________ network optimization by selecting the correct fourth-party logistics agent.
Ans: Distribution chain.
(iv) An effective _______________ system permits for broader customer reach.
Ans: Distribution.
Intext Questions 19.3
(i) _____________is a significant component of the supply system.
Ans: Processing of order.
(ii) ___________ is a significant decision in present’s marketing administration.
Ans: Physical supply.
(iii) Physical supply concerns with methodically delivering goods to ________ users.
Ans: End.
(iv) The time period of order reprocess time is finished within ____________ days.
Ans: 8.
Intext Questions 19.4
(i) ____________ channels are a combination of direct as well as indirect channels.
Ans: Hybrid.
(ii) Organisations who sell technology and software, the ____________ works as the agent of the supply channel.
Ans: Internet.
(iii) There are __________ paths to ensure a cargo gets to the end consumer.
Ans: Three.
(iv) ___________are firms who receive from producers or retailers and sell to customers in retail.
Ans: Resellers.
Intext Questions 19.5
(i) The___________ plan explains how an organisation transfer cargoes to market.
Ans: Distribution.
(ii) With a ___________of distribution chain several situations can be modelled, scrutinised, and compared.
Ans: Software.
(iii) The distribution structure ____________is principally a balancing act between the executing expenses and working assets.
Ans: Optimization.
(iv) The __________plan explains how an organisation transfers cargoes to market.
Ans: Distribution.
Intext Questions 19.6
(i) In ___________ method, the stock is generally stored locally at any retail outlets.
Ans: Retail storage with consumer pickup.
(ii) Middlemen with storage with _________ distribution need higher phases of stock.
Ans: Last mile.
(iii) The stocks which are stored at the production unit are referred to as ________.
Ans: Drop shipping.
(iv) The main merit of a network with domestic storage is the distribution ________.
Ans: Cost.
Intext Questions 19.7
(i) The ___________cargoes are those which are prearranged and there has no capacity for any modification.
Ans: Standardised.
(ii) An organisation which has a ___________ base can develop its own structures.
Ans: Financial power.
(iii) Producer’s _______will also influence the selection of the structure of distribution.
Ans: Goodwill.
(iv) Consignees can be of two sorts such as general as well as ____________.
Ans: Industria.
| Terminal Exercise |
1. Define Distribution in your own words.
Ans: Distribution refers to extending the commodities all over the marketplace such that a great number of the public can obtain it. In a distribution chain, a network is an interrelated group of storage amenities and shipping structures that obtain inventories of cargoes and then distribute them to consumers.
2. What is Distribution system?
Ans: A distribution system offers stakeholders with a sophisticated technology that permits them to locate and distribute stock across numerous locations, through a single cloud platform. It will facilitate the organisations to meet service rank anticipations while remaining consumer-centric. Therefore, it leads to enhancing more savings and creating better information-driven decisions.
3. Discuss Wholesalers.
Ans: They are intermediaries that acquire and resell cargoes to retailers. They normally don’t sell little quantities to end customers, though there are exemptions, like hypermarkets that sell towards the model of wholesale. Costs are less because sales engage huge quantities.
4. What is Retail storage with direct shipping?
Ans: In relation to this option, cargo is shipped straight away from the producer to the end customer, without involvement of the retailer. This is also known as drop shipping where all the stocks are stored at the production unit. The Information streams through the consumer through the retailer to the producer, whereas the cargo is shipped straight from the producer to consumers. In a few examples like Dell, the producer sells straight to the consumer.
5. Explain Standardised cargo.
Ans: The standardised cargoes are those for which are prearranged and there is no capacity for any modification. For instance utensils and in order to sell this a long delivery structure is used. Whereas for cargoes related to customs there is a scope for modification, for instance furniture and for this type of cargoes a face-to-face interface among the producer and the customer is required. For this a good choice will be direct sale.
6. List out the levels of distribution channels.
Ans: Their levels symbolise the distance among the producer and the end consumer.
(i) Level 0 Distribution Channel: In this sort of level, there is an intimate and direct association among the producer and the consumer. For the organisation, the price of the association with the customer is higher.
(ii) Level 1 Distribution Channel: In this level, the producer sells the cargoes to the distributor, who may sell it to customers through retailers or wholesalers. The distributor holds few of the rights to the cargo, but not all. The distributor is also accountable for the charges of sales and shipping to sales outlets.
(iii) Level 2 Distribution Channel: This is similar to level 1; the disparity is that in this situation, the distributor distributes cargoes merely to retailers, who sell them to customers.
(iv) Level 3 Distribution Channel: These are a model of customary distribution. The cargo’s journey from the producer comprises distributor, retailer, and consumer. The charges are comparative to sales as well as marketing which are segregated among the parties. The advantage of this model is that it’s possible to reach a larger number of consumers. Moreover these goods have a higher cost because of the operational charges of all the parties concerned.
7. Discuss various intermediaries involved in distribution channels.
Ans: The main intermediaries who move cargoes to customers are as follows.
(i) Retailers: Retailers are middlemen utilised often by organisations for example hypermarkets. Each of these sorts of trades has complete sales rights. Usually, cargo costs are superior in retailers.
(ii) Wholesalers: They are intermediaries that acquire and resell cargoes to retailers. They normally don’t sell little quantities to end customers, though there are exemptions, like hypermarkets that sell towards the model of wholesale. Costs are less because sales engage huge quantities.
(iii) Distributors: They sell, store, and provide technical assistance to both retailers as well as wholesalers. Their executions are concentrated on precise regions.
(iv) Agents: They are legal bodies engaged to sell a firm’s cargoes to final consumers and are paid a fee for their sales. In this form, the connection among intermediaries and organisations exists for the long term.
(v) Brokers: These people are also engaged to sell and obtain a commission. The disparity among agents is that they have a short term alliance with the organisation. That’s the situation with insurance, real estate etc.
(vi) The Internet: Organisation that sells technology and software, the internet perhaps works as the agent of the supply channel. The customer merely has to download the objects to have access to it. E-commerce firms also utilise the internet as a supply intermediary.
(vii) Marketing Teams: A firm can also have its own marketing team who are accountable for selling cargoes or services. There is also the prospect of generating more than one group to sell to several divisions if the firm has a broad range of cargoes.
(viii) Re-sellers: Resellers are firms or people who receive from producers or retailers and sell to customers in retail.
(ix) Catalogue: The catalogue sales, as the name specifies, is when a marketing person is linked to an organisation and sells its cargoes utilising a magazine. Marketing people in this model also typically earn a commission for their sales. This sort of sales is widespread in the beauty sections.
8. Highlight the significance of distribution structure optimization.
Ans: The distribution plan explains how an organisation transfers cargoes to market. In spite of organisation size or business, each firm participating in the worldwide distribution chain has some type of distribution plans. To increase a firm’s capability to stay spirited and lead the bottom-line development, a firm should analyse a distribution structure optimization either internally or through some professionals.
There are certain drivers to optimise the service stages, which are as follows:
(i) Business development.
(ii) Downsizing.
(iii) Spirited pressure and augmenting effectiveness to decrease Logistics operating costs.
(iv) Decreasing working capital.
(v) Optimising stock assets.
(vi) Varies in customer service needs.
(vii) Alters in the vendor or consumer base.
(viii) Augment in shipping charges and other general drivers.
Moreover, a firm is required to invite all the departments for enhancing the distribution structure optimization.
9. Mention the benefits of the distribution system.
Ans: The merits of making utilisation of existing supply systems or setting up a distribution system comprise however are not limited to-
(i) Decrease in costs: Starting a new supply point could be expensive for certain organisations and producers. An existing supply system offers speed and simplicity, as well as in mounting reach for cargoes geographically, thereby eradicating the charges and conflicts linked with time, human resources, and assets required.
(ii) Superior consumer reach: An effective distribution system permits for broader customer reach since it should preferably augment the pace at which goods reach the final consumer and opens up prospects to arrive at other geographic locations. Other merits consist of-
(a) Augmented client satisfaction and feedback.
(b) Quick growth.
(c) Effective marketing.
(d) Superior knowledge of customers and.
(e) Cargo preferences.
10. Sketch the channel of producer storage with direct shipping.
Ans: In relation to this option, cargo is shipped straight away from the producer to the end customer, without involvement of the retailer. This is also known as drop shipping where all the stocks are stored at the production unit. The Information streams through the consumer through the retailer to the producer, whereas the cargo is shipped straight from the producer to consumers. In a few examples like Dell, the producer sells straight to the consumer. Online retail firms for example eBags utilise the drop shipping to distribute cargoes to the final customers. The major merit of drop shipping is the capability to centralise stocks at the manufacturer. A producer can aggregate demand and offer a high level of cargo availability with less levels of stock than individual retailers.
11. Bring out the key components of distribution and logistics.
Ans: The key components of distribution and logistics are as follows:
(i) Order Processing: An organisation obtains orders from other firms, middlemen, or straight from the consumers via salesperson phone, mail or fax. Processing of order is a significant component of the supply system. It is measured as a key to consumer service and satisfaction.
The order processing mostly comprises:
(a) Obtaining the order.
(b) Recording the order.
(c) Filing the order.
(d) Assemble of cargoes for dispatch.
(e) Credit as well as collection.
(ii) Warehousing: At present, manufacturing is done in anticipation of demand. As a result, cargoes are to be stored securely for the potential demand. And as well, all the manufacturing is not sold straight. Warehousing functions a significant role for harmonising the demand as well as supply. For instance, most of the agricultural cargoes are cultivated seasonally, but have requirements all through the year. It assists both constant production and marketing of the manufacturing. The store housing service can lead to consumer satisfaction.
(iii) Transportation: One of the heart components of distribution structure is transportation. It consists of transforming the cargoes from manufacturers to end users. It consists of two parties namely carriers and consignors. Carriers firms are those that offer shipping amenities to others, such as the
(a) Railway.
(b) Indian Airlines.
(c) National shipping firms, and several other private carriers also offer t shipping services by road, train, ocean, air and pipelines.
(iv) Organisational accountability for physical supply: Physical supply is a significant decision in present’s marketing administration. It consists of a broad range of functions.
(v) Inventory administration: The term Inventory refers towards stocking of cargoes which are meant for the potential sales as well as it is a reservoir of cargoes held in prediction of sales. Demand is varying and accurate prediction is not feasible therefore the intention of preserving the inventory is to face the market demand constantly. An organisation always holds sufficient stocks of goods to face consumer orders right away. It is measured as a connection among ordering and manufacturing. Inventory administration helps the demand generation and customer satisfaction.
(iv) Logistical harmonisation: To distribute the goods from the point of manufacturing to the point of use is generally referred to as physical supply. It begins from the manufacturing and attains the final location at the exact time, in the accurate path and at fewer costs. Thus, physical supply concerns methodically delivering goods to end users.
It consists of all functions which are essential to obtain the cargoes expediently to final users necessary for example:
(a) warehousing.
(b) shipping.
(c) communicating.
(d) banking.
(e) Insurance.
(f) order processing.
(g) stock management etc.
(vii) Other Components: In reality, physical supply comprises several decisions.
Few of the minor decisions have been highlighted below:
(a) Material administration.
(b) Communication.
(c) Sorting as well as packing.
(d) Client service, etc.
12. Explain various types of distribution channels.
Ans: There are three paths to ensure a cargo gets to the end consumer:
(i) Direct Channels: With these channels the organisation is entirely accountable for distributing goods to customers. Cargoes do not move through middlemen before attaining their end destination. This model provides the manufacturer’s entire control over the supply channel. This is the situation with citizens who do list sales, for instance. Since the producer alone is accountable for distributing goods, this channel normally creates it infeasible to have a huge number of consumers. At the similar time, it’s feasible to provide fewer prices, since the firm does not have to disburse commission to middlemen.
(ii) Indirect Channels: With this channel the cargoes are distributed by middlemen, not by the consignors. The intermediaries could be the stockist, distributors, wholesalers, or brokers, for instance. In this situation, production does not have entire control over supply channels. The advantage is that this creates it possible to sell bigger volumes and sell to a variety of consumers. However, cargoes have superior prices owing to the commissions disbursed to intermediaries.
(iii) Hybrid Channels: These channels are a combination of direct as well as indirect channels. In this type, the producer has an alliance with intermediaries, but it still holds control when it arrives to contact with consumers. One instance is brands that encourage goods online but don’t distribute them straight to consumers.
(iv) Other methods: There are other diverse delivery methods that exist for distribution. Mostly, they concern who will be permitted to sell firm cargoes.
(a) Exclusive Distribution: With this type of distribution the middlemen take the organisation’s cargoes to particular sales outlets. This is generally made by a sales delegate. This refers to the fact that only selected retail outlets will be capable of selling the products to customers. Based on the quality of the cargo, this is a huge plan not only for producers but also for the retail outlets as well.
(b) Selective Distribution: With this distribution an organisation permits sales to a precise group of middlemen who are accountable for selling cargoes to end customers. An imperative feature in how victorious this plan will be is the status of the middlemen because they have a direct force over the firm’s performance. In this method, the middlemen become the genuine consultant for customers, by answering the queries and suggesting suitable goods for their requirements.
(c) Intensive Distribution: In this distribution the producer tries to position their cargoes in as several sales outlets as feasible. The producers themselves, marketing teams, and trade representatives are all included in this method. They are accountable for delivering the commodities to sales outlets. Further, is normally utilised by producers of less-cost goods with a high occurrence of consumption.
13. Highlight the distribution structure optimization.
Ans: The distribution structure optimization is principally a balancing act between the executing expenses and working assets as different to service level needs. It results in a structure that offers the optimal service at less cost. The obsolete distribution structures which have not lately been optimised from the base up frequently fail to meet the latest needs.
An increasingly wider cargo assortment with ever-shorter cargo life cycles invites quick responding distribution chains. With customer behaviour varying and the latest supply channels opening up, the method of supplying the cargoes is more complex. It encompasses an important share of the entire cost, the distribution prices are a pertinent beginning point for decreasing the distribution chain charges and improving the performance. When the pertinent features such as shipping, handling, and stock are considered, then it leads to constant end-to-end optimization of the distribution structure Further the end-to-end price decline and targeted enhancements facilitates customers to decrease the distribution charges and improve its performance. Recognizing the future parameters among activities and implementing the planning guidelines are important to optimise the distribution structures. The main focus will be on the service needs, alters in quantity as well as network data. With software of distribution chain several situations can be modelled, scrutinised, and compared.
14. Discuss the structural options for distribution.
Ans: Here we discuss the structural options for distribution in the perspective of distribution from the producer to the final consumer. While considering the distribution among any other pair of phases, such as vendor to manufacturer, several of the similar options still apply.
(i) Producer storage with direct shipping: In relation to this option, cargo is shipped straight away from the producer to the end customer, without involvement of the retailer. This is also known as drop shipping where all the stocks are stored at the production unit. The Information streams through the consumer through the retailer to the producer, whereas the cargo is shipped straight from the producer to consumers. In a few examples like Dell, the producer sells straight to the consumer. Online retail firms for example eBags utilise the drop shipping to distribute cargoes to the final customers.
(ii) Producer storage with direct shipping and in-transit merge: In this transit merge, it unites pieces of the order arriving from diverse spots so that the consumer obtains a single distribution. Information as well as cargo flows for the in-transit combined network. When a consumer orders a computer from Dell all beside a Sony monitor, the parcel carrier lifts the PC at the Dell manufacturing unit, the monitor at the Sony manufacturing unit and combines the two jointly at centre before creating a single distribution to the consumer.
(iii) Middlemen storage with package carrier distribution: Under this method, inventory is not kept by producers at their units instead they have to hold with distributors or retailers in middlemen store houses and the parcel carriers are utilised to transport goods from the middlemen spot to the end consumer. Companies like Amazon.com utilise this approach collectively with drop shipping from a producer. Information and cargo streams when utilising middlemen storage with distribution by a parcel carrier. This storage will need a higher phase of inventory since the distributor/ retailer store house aggregates uncertainty demand to a lesser phase than the producer. From the perspective of inventory this storage creates sense for cargoes with somewhat superior demand.
(iv) Performance of Middlemen storage with package carrier distribution.
(a) Inventory: It is higher than the production storage and disparity is not huge for quick moving commodities.
(b) Transportation: It is less than production storage and decrease is greatest for quick moving cargoes.
(c) Amenities and handling: Somewhat high than production storage and the variation can be huge for less moving cargoes.
(v) The performance of Middlemen storage with last mile distribution.
(a) Inventory: It is high than the distributor storage with parcel carrier distribution.
(b) Transportation: Price is very high with a given minimum scale of economies. It is higher than any other delivery choice.
(c) Amenities and handling: Amenities charges are higher than production storage or distribution storage with parcel carrier distribution, but less than a retail chain.
(vi) The performance Producer / middlemen storage with customer pickup.
(a) Inventory: Can equal any other choice based on the spot of stock.
(b) Transportation: It is less than the utilisation of parcel carriers, particularly if utilising the existing distribution network.
(c) Amenities and handling: Amenities charges can be high if latest amenities have to be constructed. Charges are lesser if existing amenities are utilised. The augment in handling charge at the pickup location can be important.
15. Spotlight the factors influencing distribution structure decisions.
Ans: Significant features influencing distribution structure decisions by the manufacturer are:
(i) Considerations connected to cargo: When a producer chooses some distribution structure he/she must take care of such features which are connected to the quality as well as the nature of the cargo.
They are as follows:
(a) Unit worth of the cargo: When the cargo is very expensive it is best to utilise the small supply channel. For instance, cargoes like gold, machinery are very expensive cargoes, which is the reason they focus on small distribution structures. Whereas for less expensive cargoes long distribution structures are utilised.
(b) Standardised cargo: The standardised cargoes are those for which are prearranged and there is no capacity for any modification. For instance utensils and in order to sell this a long delivery structure is used. Whereas for cargoes related to customs there is a scope for modification, for instance furniture and for this type of cargoes a face-to-face interface among the producer and the customer is required. For this a good choice will be direct sale.
(c) Perishable: As the cargo is perishable in nature, the producer should select the least structure of distribution by avoiding any middlemen. On the divergent, a long distribution structure can be chosen for durable cargoes.
(d) Technical Nature: If a cargo is of a technical nature , then it is superior to distribute it straight to the customer. This will assist the consumer to understand the essential technicalities of the cargo.
(ii) Considerations connected to Market Market considerations are mentioned below:
(a) Number of consignees: If the number of consignees is huge then it is healthier to take the services of intermediaries for the distribution of the cargoes. On the other hand, the supply should be made by the producer straight if the number of consignees is less.
(b) Types of Consignees: Consignees can be of two sorts such as general as well as Industrial. If the more consignees of the cargo belong to general sort then there can be more intermediaries whereas of industrial consignees there can be less intermediaries.
(c) Buying behaviour: A producer should take the services of intermediaries if his monetary position does not allow him to sell cargoes on credit to those customers who are in the practice of procuring cargoes on credit.
(d) Buying Quantity: It is helpful for the producer to depend on the services of intermediaries if the cargoes are bought in less quantity.
(e) Market size: If the market spot of the cargo is speeded fairly, then the manufacturer must take the assistance of intermediary.
(iii) Considerations connected to Manufacturer/ Organisation Considerations related to manufacturer are provided below:
(a) Goodwill: Producer’s goodwill will also influence the selection of the structure of distribution. A producer enjoying superior status need not rely on the intermediary as he can commence his own sub offices easily.
(b) Wish to control the channel of Distribution: A producer’s aim to control the structure of distribution influences its selection. Customers should be dealt directly by such a sort of producer. For instance, electronic cargo divisions with a purpose to control the service stage offered to the consumers at the position of sale are resorting to organisation owned retail outlets.
(c) Financial power: An organisation which has a well-built monetary base can develop its own structures. Whereas, economically weak organisations would have to rely upon intermediaries.
(d) Considerations connected to Government Considerations connected to the government also influence the selection of structure of distribution. For instance, according to the regulation of the government merely a licence possessor can sell medicines in the market. In this scenario, the producer of medicines should make sure that the supply of his cargo takes place only via such intermediaries who have the pertinent licence
(v) Others.
(a) Cost: A producer should choose such a structure of distribution which is less expensive and also helpful from other viewpoints.
(b) Availability: At times some other structure of distribution can be selected if the preferred one is not present.
(c) Possibilities of Sales: Such a structure which has a prospect of huge sale should be provided weight age.
