Implementing a 3rd party distribution system in emerging markets can be a challenging undertaking. Often distributors don’t have the required skills and need additional support and training in order to be successful. Below are a number of issues to consider.
1. Supply Chain Skills Development
Emerging markets lack skilled supply chain professionals. It is vital to conduct a skills gap analysis to determine the training recruitment needed.
2. Network Design Skills
Most distributors lack the skills required for network design and routing. Often route schedules are missing and maps are out of date. Companies can play an important role in providing the required training and support to ensure effective network design.
3. Distribution Cost
Often, distributors fail to understand and lack the required skills to determine the true cost to serve. Distributors can often need a helping hand from their principals or partners.
4. Financial Management
Many distributors go out of business due to poor cash flow and working capital management. Distributors provided credit to smaller outlets to expand their business, but lack the required skills to keep track of debtors. When appointing a new distributor, work closely with them to ensure they have the required financial skills to manage their business.
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This is an extract taken from our full Understanding Distributor Management Skills guide.
Many thanks to Supply Chain Lab for contributing this guide.