In one of our earlier articles (Link) we discussed in details why a Distributor Management System is must for an Indian FMCG company irrespective of its business volume. While for a large player, an automation of distributor operations would help in cementing its position, a budding company would find it as a useful ammunition to achieve the desired growth. However, we also briefly mentioned in that article that a DMS implementation is not a very easy task and could meet with many challenges which, if not handled properly, could lead to eventual failure of the entire implementation. And we all know what it means if an IT initiative fails in any organization. It’s not just about the money spent or wastage of time invested by senior leadership, in most of the cases such failures trigger a blame game within the organization which probably drains more energy out of the entire team for nothing.
And no one would disagree that one of the major challenges faced in any DMS implementation is getting your distributors on-board. Unless you an FMCG superpower, you are for sure going to face a stiff resistance from most of your distributors and in some cases, it is not completely unjust as well. You should be patient enough to understand their concern and then explain them how some of these concerns are more perception driven and what benefits they can reap once they start using DMS for their regular operations. In order to help you with that, let us first list down typical reasons why distributors resist such an automation:
Multi-brand Distributors: Most of the distributors are managing multiple companies and brands as only very few companies have the monetary and bargaining power to enforce exclusive distributorship. Hence, for a distributor to operate on different systems for different manufacturer is a big challenge, at least mentally.
Unease with Technology: Many of these distributors are not quite tech savvy because of different reasons such as lack of exposure, remoteness of their area of operations, mental barrier etc. They would prefer to run the business completely manually as they have inherited it from the previous generation and would consider technology automation is meant for corporate world only.
Lack of skilled resources: And even if a distributor is willing to take the automation route, he may face challenges in employing right kind of resources who is comfortable in running a software to manage master data, record all transactions and download relevant reports.
Mal-practices and manipulations exist: Let’s accept the fact that distributors actually eat into the margins of manufacturer and retailers through various means. Many a times they do not pass on the promotions to the retailers or exaggerate the return and submit false claims. Hence the transparency which a DMS would bring in the distribution channel is definitely a cause of concern for them and probably the biggest of all.
As a brand owner, it becomes your responsibility to help your distributors as much as possible to overcome the above-mentioned challenges (off course not for the last point) and, also to convey to them the eventual benefits for them. While there are lot to talk about, we have listed down five most important factors from the point of view of a distributor:
Stock data at their fingertips: One of the biggest challenges a distributor faces is having complete visibility of product stock by batch details in different warehouses. Lack of same means a lot of manual intervention in order fulfillment and in primary order request generation which in turn can lead to loss of business for the distributor.
Managing Primary Order process smoothly: A DMS portal would mean a distributor can place primary order requirement as per his convenience and track the status till delivery of the order. Also, he will have complete visibility on what he has paid and what he needs to pay and thus getting rid of unnecessary back and forth conversation on the same.
Automation of Secondary Order Management process: Getting orders, confirming them, creating delivery challan, applying promotions and generating invoices retailers are what distributor staffs spend maximum time on. And, if you can automate that entire process, the distributor can save money either on resources or on some value addition for its customers.
Complete visibility of account receivables: One of the pain points of all distributors is to keep a track on the payment to be received from retailers, credit limit, credit history etc. With an integrated DMS solution in place, the distributor can breathe a sigh of relief as he can now dump those accounting notebooks and download a payment collection report any time with click of a mouse.
Take analytics driven decision: A distributorship is a business which runs into crores and the owners need to take strategic decision on many things such as periodicity of order, low moving stocks, high credit customers etc. A DMS system with strong analytics backbone can enormously help distributors in taking such important decisions which will eventually drive the growth of his business.