Distribution Concept

What is a Distribution Concept?

A distribution concept defines how a company delivers its products to customers in the most efficient and customer-oriented way possible. A solid distribution concept takes the following factors into account:

• Distribution channels
• Distribution structure
• Means and modes of transport
• Service level
• IT and software systems

For example, distribution channels may include direct or indirect sales. In direct distribution, goods move straight from manufacturer to customer. In indirect distribution, retailers, wholesalers, or online platforms act as intermediaries.

The distribution structure involves decisions such as using centralized or decentralized warehouses, the number of warehouse locations, and the organization of the goods flow.

Means of transport may include trucks, rail, air freight, sea freight, or a combination of transport modes (intermodal transport). It must also be decided whether to use in-house vehicles or hire third-party logistics providers.

The service level refers to aspects like delivery times, delivery reliability, and returns management.

IT and software systems refer to the selection of systems such as enterprise resource planning (ERP), warehouse management systems (WMS), and transport management systems (TMS).

Goals of a Distribution Concept

• Satisfied customers
• Optimized costs
• Fast and reliable deliveries
• Flexible response to demand fluctuations
• As sustainable delivery as possible