Distribution Practices in Nepal

The functions of supplying/carrying goods or service from production center to sales centers are called distribution activities or practices. The goods demanded by consumers should be supplied in right quantity, at right place and at right time. Right agents, middlemen or right distributors should be selected for effective distribution. For this, the producer should select
suitable channel for distribution. Physical distribution makes marketing complete. The channels used in transporting goods for systematic and effective distribution are mentioned as follows:

1. Physical distribution

Physical distribution is the simple process of supplying the product to the final consumer/customers. Physical distribution creates place utility, time utility and ownership utility. The main components of physical distribution are mentioned as follows:

a) Order processing: At first the customers send order for purchasing goods. When such orders are received, they should be collected, sorted out and goods should be delivered as ordered. Such different activities are, on the whole, called order processing. This function is very important for physical distribution. Customers should be made happy and satisfied through systematic and effective functions. If the customers become happy and satisfied, the business becomes successful and business earns more profits. But the aspect/function of order processing is very weak in Nepal. So, more attention needs to be paid towards making such activities effective.

b) Warehousing: Storing products in right place until they are demanded or supplied to market is called warehousing. It creates time utility by providing goods at the right time when demanded by customers. The warehouse management should keep products in safe. They also should be kept in proper stock and be carefully looked after. Otherwise there remains possibility of theft, damage, robbery, or so on. So, the warehousing should perform the works such as collecting, packing, shipping, providing safety etc. Such warehousing activities are found centered only in city areas. But good warehousing management is lacking in the hilly areas of Nepal.

c) Material handling: Bringing raw materials for production and keeping produced goods in warehouse is called material handling. Besides, goods need to be taken to airport, railway station, bus station etc. Moving goods from one place to another, they may get damaged or broken. So, right equipment, technology, or methods should be used to minimize loss or damage. Porters, labors, trucks, cranes etc. are used to move goods to warehouse from factory/production place. But in our country, Nepal, new technologies are not found in practice or are not available.

d) Inventory management: Proper inventory of goods/products should be kept in balance for effective distribution. Both unnecessarily huge and least quantity of inventory may be dangerous. So, an ideal inventory should be managed. The same function is called inventory management. If the inventory is least, goods cannot be supplied according to demand and even regular customers go away. If the inventory is more than needed, capital, warehouse cost, insurance cost may increase. So, inventory management should be analytical and balanced. In our country, inventory management is not found scientific. Its management aspect is very weak.

e) Transportation: Transportation creates place utility of goods by supplying them to consumers from factory/production place. Surface/road airways, pipe lines, trucks, ships etc. can be used for transporting goods. So, while selecting means of transportation and using them, their cost, speed/pace, consistency, safety, availability, etc. should be seriously considered. As far as possible, safe and lesser costly means should be selected. Since, our country lacks navigation development, bus, park, train, place etc. are used.

2. Distribution channel

Different business firms and companies produce goods of different quality. They should be transported to the places of end users. They way which is used to transport goods to the target markets is called distribution channel. The structure of distribution channel may be different due to nature of goods and environmental elements/factors. Some reputed companies involve producer – wholesalers – retailers in Nepal. Some other business firms use vertical channel system. Some companies supply their products to stock holders and the stock holders send the products to sales centers by appointing sales representatives. The sales representatives receive purchase orders and distribute the products to shop or sales centers according to the orders.

Due to difficult geographical region, distribution channel has not become systematic and effective. Nepal Liver Limited, Pepsi Company and Coco-Cola Companies are trying vertical distribution channel. Conflicts have also appeared in marketing channel due to inability to akin/fix the role of middlemen. However, it is expected that big companies will be able to solve such problems in near future. Products should be compulsorily carried to target markets through one or the other distribution channel. Suitable/proper channel should be selected according to the nature and condition of the goods. Generally, distribution channel for industrial goods becomes short whereas it may be long for consumer goods. Considering this matter, the distribution manager should select proper channel.

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