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Distribution Software & Channels
Distribution software has altered traditional marketing channels and supply chains by changing the relationships between manufacturers, distributors and customers. The evolution of electronic business has, in some respects, complicated the roles of manufacturers and distributors, even while it ensures ease of customer access to a wide array of products. It is still possible, however, for manufacturers who still require independent distributors or channel dealers to get their products to market, to leverage those relationships to advantage, by employing some simple channel management strategies.

Understanding end user needs, in terms of both current products and future purchasing priorities, is a must for manufacturers to maintain their competitiveness in the work of e-business. The answer is not always just at top-notch product, but a clear understanding of how and why customers buy and utilize the product is also necessary. One way to remain cognizant of customer desires is to optimize use of distributor channels. Choosing the best distributor channels, with access to the most customers, is an effective strategy. It is a given that customer requirements change over time. By partnering with distribution channels that are most successful at keeping current with consumer trends, the manufacturer can establish a beneficial position in the system. Given a particular product, the most successful channel might include the best services in terms of electronic data exchange and procurement support; or it might be the one that reduces the customers total cost of acquisition. Te key for distributors is identifying which channels best meet the needs of consumers of their products, and proceeding to partner with them.

Because distribution software and electronic business is unbundling channel activities, manufacturers must rethink their approaches to channel compensation. There is a strong trend toward bypassing traditional sales channels due to the ease of transacting previously complicated procedures over the Internet. For example, customers find it much simpler to gather information such as product specifications, potential supplier resources, and warranty and rebate information, on their own through online technology. Channel margins drop as value-added functions are shifted directly to the customer. Some manufacturers have been able to counter this trend by using functional discount programs in which distributors are compensated in ways that link payments to actual activities performed by the channel.

Manufacturers have the advantage of heading the supply chain and are best positioned to evaluate their distribution channel partners needs prior to implementing new technologies and programs. A strong knowledge of the competencies and performance history of potential channel partners puts the ball squarely in the manufacturers court, when making qualitative distribution selections.

A good evaluation of a possible channel partner often consists of asking the right questions.

A Company needs to determine whether or not the distributor has adequate distribution software and plans for regular upgrades. The successful distributor is one that is capable of making appropriate software purchases, as well as integrating and maintaining them over the long term. In addition, the customer needs to have a seamless interaction with the systems that link manufacturers and distributors. If operations are too complex or time consuming, or if they dont perform up to expectations, the customer will choose another means of purchasing the product. The manufacturer must be able to assess how well the distributors performance will meet the needs of customers, including ease of purchase through electronic means. Growth plans on the distributors part can also be a critical piece in the manufacturers evaluation process.

Having a clear vision of how technology fits into their company, having a realistic plan for growth, and having a good understanding of why customers buy from them, are critical pre-requisites for a manufacturer when choosing to partner with a particular distributor.



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