What’s Hot and What’s Not for Winning Distribution Management in Asia
Asian retail and e-commerce market has grown leaps and bound in the past year and there is good reason to celebrate. What was once thought to be a red tape wasteland of opportunities, is turning out to be quite the temptress for all major corporations in the world. How did this transformation happen? How did Asian market become the darling of industries such as retail, FMCG, e-commerce, manufacturing, etc.? The key here is ‘distribution’.
Distribution goes hand in hand with brand engagement as it is the last bastion of value while reaching the end-customer. Distribution should be considered as part of the marketing channel to ensure the perpetuity of brand identity.
Distribution, if not handled right, can erode value off from the brand and the product, cutting down on market share. Hence, uncertain distribution channels open the company to unnecessary market risks.
It is not that suddenly there is an increase in the disposable income available to Asians. It is not that suddenly internet penetration has sky rocketed. It is not that globalization has peaked in the last couple of years. Then why has distribution made such a turnaround from being the very thing people used to cite as a reason not to do business in Asia.
The Rise of Distribution Management Systems
Distribution had always been thought of as an afterthought in Asian markets and rightly so. It was extremely difficult to predict the bottlenecks of a distribution channel in advance. The unorganized nature of the networks crippled even the best manufacturing outlets. If you have a ton of merchandise and around 1000 stores to reach, how would you do it without a proper and consistent distribution channel? It was done at the ground level with expert local awareness, but such expertise couldn’t be automated due to the lack of a systematic approach and the dynamic nature of the challenges.
Distribution management systems are as good as the intent of its usage. In Asia, change management is as big a task as any other. Companies must train their extensive number of resources to better appreciate the power of the automated system. This is a cultural investment which inspire more technology adoption amongst the workforce.
The machine learning algorithm is as good as the data that is fed into the system. If automation distances the workforce and the management from the actual market, foregoing active feedback, then the information fed into the algorithms might not be of quality. The overall result would be short of the actual mark. There should be a balance between automation and customization. The management should never lose touch with the ground-level data.
This necessity bought into focus the key problem with distribution management and inspired many companies to invest in the technology to better understand the processes. The expertise that needed to be replicated, now can be converted into action through an intensive machine learning algorithm. This machine learning algorithm channeled all the ground information into layered logic channels which helped suggest the most optimal distribution route to be taken for the quickest turnaround time.
Even though the machine learning algorithm caught on, there was still the question of capturing that data. The two ends of the spectrum were bridged by companies like LogiNext which created an easy to use cloud based software for the delivery field agents. The agents could easily collect relevant information into their smartphones, and the applications did the rest. The GPS enabled application were not solely dependent on secure internet service providers.
Even in the absence of such connectivity, the app continued to track and record all movements to eliminate the possibility of data loss. This is where technology, ground-level knowledge, and logic mingled to create a comprehensive solution frame for the distribution challenges in Asia.
The Dominance of Logistics Management Systems
With distribution management systems finally overcoming the localized infrastructure hassles in Asia, logistics management systems connected all the planning dots to create a complete strategic landscape for enterprise mobility systems.
Logistics management system learn from a base level of information. The more they learn, the more accurate their predictions would be. All the data captured into the system is serving a larger purpose.
Asian markets depend heavily on just-in-time replenishments as smaller retailers seldom have a strong inventory management system. The distribution channel should be kept healthy to avoid disruptions, which might lead to brand dilutions.
The logistic management system ran the analytical data of the distribution management system to forecast the most likely market demand and procurement requirements accurately. Logistics management systems optimized all the routes utilized by delivery and field service professionals bringing down fuel and time costs across resources. The cost benefit, hence, attracted multinational companies back into Asian markets. With the distribution hurdle crossed, the nascent Tier-II markets opened with a vengeance.
Mega Distribution Centers in Asia
Mega distribution centers have been perfected in Europe and now have finally entered the Asian landscape. Many top manufacturing companies operate their distribution through such mega distribution centers. These centers are placed strategically across the country to service heavy frequency territories. Some of these mega distribution centers are 100s of acres long and service thousands of wholesalers and retailers at a time and run through another couple of thousands of fleet and field workforce.
Hub and spoke model of distribution management requires all nodes being active and connected with a clear channel of communication running across levels enabling end-to-end visibility. This visibility increases the potential of strategic breakthroughs in terms of risk management or opportunity seeking.
Companies should rid their resistance towards investment into a logistics management system as it would give a revenue turnaround in terms of market capture and cost reduction up to 1.5 – 2 times the initial investment.
Logistics management in Asia has become a reliable and stable entity in the past couple of years with mega distribution centers, machine learning enabled software, cloud based application and tracking, hardware agnostic services, and comprehensive analytics. With saturation creeping into the developed markets, more and more companies are taking advantage of such logistics and field workforce optimization platforms to cut down costs and boost productivity, ultimately sustaining a secure distribution network.
It’s not a coincidence that Alibaba’s recent ‘Single’s Day’ outperformed all American retail and online campaigns by an embarrassingly large margin.