CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
For any organization to be effective there should be effective distribution management process to convey finished products from the manufacturer to the final consumers. This is because without distribution the best product will not be delivered and the marketing mix will break down and fail. As a result of this, firms are increasingly adopting supply chain management to reduce cost, increase market share and sales, and build solid customer relations (Ferguson 2000). Supply chain management can be viewed as a philosophy based on the belief that each firm in the supply chain directly and indirectly affects the performance of all the other supply chain members, as well as ultimately, overall supply chain performance (Cooper et al, 1997). The effective use of this philosophy requires that functional and supply-chain partner activities are aligned with company strategy and harmonized with organizational structure, processes, culture, incentive and people (Abell 1999).
Distribution channel consists of a group of individuals or organizations that assist in getting the product to the right place at the right time. Distribution plays a vital role, primarily because it ultimately affects the sales turnover and profit margins of the organization. If the product cannot reach its chosen destination at the appropriate time, then it can erode competitive advantage and customer retention.
The retail industry is responsible for the distribution of finished products to the consumer as well as the public. The retail sector comprises of general retailers (managed by individuals/families), departmental stores, specialty stores and discount stores. In practice, many organizations use a mix of different channels; in particular, they may complement a direct salesforce, calling on the larger accounts, with agents, covering the smaller customers and prospects. However, the major challenge now facing the retail industry is the power of the customers or buyers. This is because the customers are becoming increasingly knowledgeable, impatient, not wishing to wait for the suppliers’ products for any period of time.
In today’s highly competitive global marketplace, the pressure on organizations to find new ways to create value and deliver it to their customers grows ever stronger. The increasing need for industry to compete with its products in a global market across cost, quality and service dimensions has given rise to the need to develop more efficient warehousing strategies. Warehousing has come to be recognized as a distinct function with the rise of mass production systems. Warehousing is the storage of goods, whereas distribution center precedes a post-production warehouse for finished goods held for distribution. Therefore, warehousing and distribution centres basically have the same function of goods and products storage (Coyle at el, 2003). The warehouse and distribution centres are very important nodes in a supply chain network. They perform valuable functions that support the movement of materials, storing goods, processing products, de-aggregating vehicle loads, creating stock keeping unit assortments and assembling shipments (Andre Langevin and Riopel Diana, 2005). The efficient management of warehouses helps to optimise the existing production and distribution processes and greatly assist in the goal of cost reduction and service enhancement.
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