Distribution refers to the steps taken to move and store a product from the supplier stage to a

customer stage in the supply chain. Distribution is a key driver of the overall profitability of a
firm because it directly impacts both the supply chain cost and the customer experience. Good
distribution can be used to achieve a variety of supply chain objectives ranging from low cost to
high responsiveness. There are different distribution models. A wide range of distribution
choices needs to be evaluated. One will choose only the one which serves the company and its
customers better. There are instances when different modes are used for different type of
products of the same provider. It takes several days for the customer to receive the product in the
latter case. One needs to ensure if these network choices are justified and appropriate. The
channel of distribution has to be decided keeping in mind the cost and time factors. At the
highest level, performance of a distribution network should be evaluated along two dimensions:

Value Provided to the customer: A customer need is a motive that prompts a customer to buy a
product or service. Ultimately, the need is the driver of the customer's purchase decision.
Companies often look at the customer need as an opportunity to resolve or contribute surplus
value back to the original motive. An example of customer need takes place every day around
12:00 p.m. This is when people begin to experience hunger (need) and decide to purchase lunch.
The type of food, the location of the restaurant, and the amount of time the service will take are
all factors to how individuals decide to satisfy the need. Customer-centric companies know that
solving for customer needs and exceeding expectations along the way is how to drive healthy
business growth and foster good relationships with the people your company serves. Creating a
customer-centric company that truly listens to customer needs can be daunting, and there's a
steep learning curve if you haven't paid close attention to customers before. So to steer you in the
right direction, here's a beginner's guide that defines the types of customer needs to look for,
unpacks common barriers that prevent companies from fulfilling their customers' needs, and
discloses solutions to start improving customer service.

Functionality Reliability Fairness

Price Performance Transparency
Convenience Efficiency Control
Experience Compatibility Options
Design Empathy Information
Cost of meeting customer needs:

The digital world has given consumers unparalleled access to businesses the world over. With
this comes choice, convenience, and the ability to make more economic purchasing decisions.
Today’s customers expect to get their goods fast and to their convenience when they order them.
They expect flexibility around delivery options, and increasingly, they expect little or no delivery
charge for these services.

First, Determine Your Unit Costs: Generally, this should be relatively easy to find out the per
unit cost. Next, determine how customers value your products.

Penetration Pricing: This is the low-cost approach, where you initially offer a price lower than
your competitor’s for the purpose of attracting price-sensitive customers quickly. The downside
of course is that you squeeze your profits; indeed, in many cases new ventures choose to price
below cost to bring in those early customers.

Premium Pricing: This kind of pricing is coupled with providing superior benefits or service
compared to your competitors, to justify that higher price. Sometimes a premium price will be
charged for some products to attract customers who want that premium quality, with other
products are priced lower to attract those who are more value-focused.

Price Bundling: This is a common strategy for getting customers to buy more of your products,
by offering a deal for buying a package. Purchase internet access along with your phone service
for a discounted price. This strategy can be very effective in that the customer perceives value,
while the provider increases sales and, ideally, a long term customer who spends more for each
purchase.

The customer needs that are met influence the company’s revenues, which along with cost
decide the profitability of the delivery network. While customer service consists of many
components and will focus on those measures that are influenced by the structure of the
distribution network. These include:
 Response time: Response time is the total time between when a customer places an order and
receives delivery. Response time is the total amount of time it takes to respond to a request
for service. Ignoring transmission time for a moment, the response time is the sum of the
service time and wait time. The service time is the time it takes to do the work you requested.
 Product variety: Product variety is the number of different products / configurations that a
customer desires from the distribution network. Product variety and production
quantity relation. Actually product variety is nor directly means that the end product types
that produced by a manufacturing facility or manufacturing process. It is directly related to
which kinds of parts are produced in yearly basis in a manufacturing process or facility.
 Product availability: Availability is the probability of having a product in stock when a
customer order arrives. Product availability is not necessarily having items available 100% of
the time but rather having items available when the customer needs it. It is a matching game
of timing the preparation of an item nearest to when the customer seeks it.

 Clear Policies, Accurate Records

 Gain Control
 Continuous Improvement
 Build Rapport

 Customer experience: Customer experience includes the ease with which the customer can
place and receive their order. Customer experience (CX) is everything related to a business
that affects a customer's perception and feelings about it. Customer experience involves
every way a customer interacts with a company, at all stages of the customer journey.
 Order visibility: Order visibility is the ability of the customer to track their order from
placement to delivery. Supply chain visibility (SCV) is the track ability or traceability of
product orders and physical product shipments from the production source to their
destination. This includes logistics activities and transport as well as the state of events and
milestones that take place before and during transit.
 Returnability: Returnability is the ease with which a customer can return unsatisfactory
merchandise and the ability of the network to handle such returns. Returnability is the ease
with which a customer can return a damaged product. However, it involves cost too. Return
ability is worst when a damaged good has to be returned to the manufacturing site from
where it was originally shipped.