Textbook: System of distribution and distribution of goods. Product distribution channels The marketing department consists of the head of the marketing department, who provides general management of the department, and a marketer. The main functions of the marketing department are

Some of the factors influencing the choice and organization of distribution channels stem from the nature of a particular market, others are related to the characteristics of the product itself, and others are related to the type of activity and position of the company. Some of the factors are so unique to the individual suppliers of manufactured goods that it is not practical to discuss them.

Factors taken into account by the supplier of goods when selecting a sales agent

Sales volume. The supplier prefers to deal with a sales agent whose sales volume is large enough and who can bear the costs of maintaining a relatively large and well-equipped enterprise that can provide the appropriate level of quality in sales activities.

Action area. This factor applies only to the manufacturer's agents, since sales agents, as a rule, undertake the sale of all client products to enterprises in a particular industry. An industrial company using the services of manufacturer agents must select them taking into account their coverage areas (areas served) in order to cover the market as fully as possible.

Quality of sales personnel. Under normal circumstances, all sales activities of an agent are carried out by a small number of personnel, who must be sufficiently qualified and energetic.

The agent's position in the industry and his business contacts. When a supplier of industrial goods contacts a sales agent, he assumes that the agent has established business relationships with enterprises in the relevant industry. Therefore, before finalizing its relationship with the agent, the supplier should ensure that such connections and contacts actually exist.

What other products does the agent deal with? The firm must ensure that the products handled by its intended sales agent provide a good environment for its own products. The sales agent's product range should consist of similar products (in type and quality) sold to approximately the same consumers. It is desirable that these products enjoy a good reputation as intermediaries in the industry for a certain period.

A sales agent or intermediary first of all wants to know whether the supplier's product offered is suitable in type and quality to the level of their main product range. In most cases, they strive to give their companies an identity (the image of a supplier of high quality goods, a supplier of reliable goods at affordable prices) or to emphasize the offer of goods at low prices with some damage to their quality. Therefore, when they are offered a new product, they evaluate it not only from the point of view of the quality of the product itself, but also from the point of view of its compatibility with other products they sell and the ability of the market to perceive a certain image of their companies.

A supplier of industrial goods using intermediaries has the opportunity to increase the attractiveness of its product through proper packaging. The intermediary will positively evaluate packaging of a size and shape that will facilitate the movement and handling of goods and allow them to be stored without loss of space. Packaging must protect the goods during normal warehouse operations. The labels on the packaging should be simple and clear and located in places that are convenient for viewing when storing the goods on shelves or racks. In certain cases, the number of items in one box plays an important role for the intermediary.

If there are too many items in a case, it creates the problem of many disparate case lots. And if there are too few units in a box, the manufacturer is unable to set a high enough quantity discount. In addition, the costs of the intermediary for processing the goods increase.

Types of sales assistance. Most suppliers of goods who sell them through sales agents or intermediaries consider it necessary to link and coordinate their sales activities with the actions of their external sales bodies and provide them with various types of assistance. This may involve minor changes to current activities or the development of special, complex and expensive programs.

Assistance in processing small orders. Many intermediaries believe that suppliers of goods purchased in small, uneven quantities must bear part of the additional costs caused by this circumstance. Some suppliers offer a special discount in this case. Others package their product in pairs or combine more units into one retail package. Packaging is designed so that a typical shipping box will contain a dozen items in retail packaging. This packaging method significantly reduces the costs of the intermediary and gives the product itself additional attractiveness.

Advertising. The supplier can use advertising as a means of inducing the intermediary to cooperate more actively. This process begins with the preparation of the advertising messages and materials themselves. The intermediary will approach their assessment from one point of view: how much they can help him in selling the goods of this supplier.

Merchandise distribution is the activity of planning, implementing and monitoring the physical movement of materials and finished products from their places of origin to places of use in order to satisfy the needs of consumers and benefit themselves.

Distribution channel is the route by which goods move from producers to consumers, thereby eliminating long gaps in time, place and ownership that separate goods and services from those who would like them

Sales of products in most cases are carried out through intermediaries. The use of intermediaries in the sphere of circulation. advantages: they deal with a limited circle of interested parties, wide availability of goods when moving them to the sales market, reduction of direct contacts between manufacturers and consumers of products.

Supply and sales organizations, large wholesale warehouses, exchange structures, trading houses and stores can act as intermediaries.

Functions: conducting research work, sales promotion, establishing contacts with potential consumers, manufacturing goods in accordance with customer requirements, transporting and storing goods, financing issues, taking responsibility for the functioning of the distribution channel.

Structure and levels of distribution channels.

Direct channels are associated with the movement of goods and services without the participation of intermediary organizations: the manufacturer and consumers themselves control their marketing program and have limited target markets.

Indirect channels are associated with the movement of goods and services first from the manufacturer to an unfamiliar intermediary participant, and then from him to the consumer. Such channels usually attract enterprises and firms that, in order to increase their markets and sales volumes, agree to give up many sales functions and expenses and, accordingly, a certain share of control over sales, and are also willing to somewhat weaken contacts with consumers.

Mixed channels combine the features of the first two channels of product distribution. Thus, enterprises in the machine-building complex make little use of the advantages of direct contacts with suppliers; they sell products through a system of intermediaries. Other government and commercial intermediary organizations and enterprises are emerging, guaranteeing a much larger range of supply and distribution services. Direct marketing is used in complex technological production, when the manufacturer independently provides installation of complex equipment directly at consumer enterprises.

Distribution channels can also be characterized by the number of levels that comprise them. Distribution channel level- this is any intermediary who performs this or that work to bring the product and the ownership of it closer to the final buyer.

Distribution channel selection criteria:

Target market size.

The size of the market is determined by the number of potential buyers. If the market is large, then turning to intermediaries is mandatory.

Product Detail.

Short channels are required for perishable goods, for heavy and bulky goods (since they entail high transport costs), as well as for goods of high technological complexity that require after-sales service.

Long channels are suitable for inexpensive standard goods (canned food, chewing gum, clothing, shoes).

Characteristics of the company. Large firms have greater financial resources and are able to take on many sales functions and do without a large number of intermediaries.

Note: In the consumer market, distribution channels are longer than in the business market.

In many cases, the choice of distribution channel is the most important decision for a company. The company that has taken over the functions of product distribution must pay all costs that arise. In addition, she fully receives all income due from the delivery and sale of products. If independent (external) distribution channels are used, then relative delivery costs can be reduced, but profits will also be reduced, since the relevant sales organizations participating in the distribution process receive their share of the profits. The total profit of the company and, accordingly, intermediaries can increase if an increase in the volume of sales of goods is achieved.

Planning and organization of distribution channels

The work of planning and organizing distribution channels includes three main stages. The supplier of goods must, first of all, conduct an analysis aimed at identifying the types and subtypes of work that should be performed to sell his goods and their smooth promotion to the market. He must identify and correctly interpret the impact of various factors on the performance of these works. He must then decide which types of agents or sales units can most effectively carry out the tasks he assigns them. Finally, he must select the individual representatives of each type of marketing agency best suited to perform his specific tasks and establish business relations with them.

It is unlikely that sales executives have ever faced the task of rebuilding an entire distribution channel system. Much more often there is a need to adapt an existing system to changing market conditions or sales goals.

The work of adapting an existing channel is naturally more difficult than creating a new system. Even in the early stages of planning and analysis, the sales manager will likely find that his thinking is influenced by a tendency to assume that the existing structure is the right one.

Imagining the system of distribution channels he requires, he is faced with the inevitability of such a profound breakdown of existing sales bodies, which will inevitably lead to a serious decrease in sales volume, a deterioration in the position of his company in the market and a drop in profits.

In many cases, you have to act carefully and gradually build a new sales structure in parts and over a considerable period of time.

Factors influencing the choice of distribution channels

Factors taken into account by the supplier of goods when selecting a sales agent

Quality of sales personnel. Under normal circumstances, all sales activities of an agent are carried out by a small number of personnel, who must be sufficiently qualified and energetic.

Strategy for the formation and development of distribution channels

The strategy for the formation and development of distribution channels takes into account:

Requirements for the sales network in this market segment;

Organizational structure of the sales system of your enterprise;

Level of qualification of commercial personnel;

Experience of the enterprise's sales network in this market segment;

Assessing the feasibility of using intermediary services;

Types and number of intermediaries accepted on the market;

Possibility of increasing sales volume with the help of intermediaries;

Policy of intermediaries in relation to your company;

Possibilities of the enterprise's financial resources to create a sales system;

The degree of effectiveness of your own sales system compared to alternative opportunities;

Compliance of new production with the organizational sales structure of the enterprise;

Existing supply practices and customs on the market;

Number of potential consumers;

Geographic concentration of sales;

Habits and preferences of end consumers;

Size of single orders;

Divisibility of goods;

Variability and instability of the product (from the point of view of its storage);

The volume of services provided by the enterprise to the buyer;

The degree of management's desire to control distribution channels, etc.

1.1 Product in the marketing system 5
1.2 Product movements in marketing 8
1.2.1 The essence of product distribution 12
1.2.2 Goals of product distribution 15
1.2.3 Product distribution system 17
1.3 Product distribution channels 19
19
1.3.2 Types of distribution channels 21
1.3.3 Competition in distribution channels 26
1.3.4 Distribution channel management 27
1.3.5 Planning and organization of distribution channels 29
1.3.6 Factors influencing the choice of distribution channels 30
1.3.7 Strategy for the formation and development of distribution channels 33
2. analysis of product distribution and main performance indicators of Artis T LLC 34
34
2.2 Analysis of product distribution of the Arkhangelsk branch of ARTIS T LLC 45
2.3 Profit and profitability analysis 50
2.4 Analysis of the competitiveness of the enterprise 57
2.5 Analysis of basic needs and sales channels 59
3. development of measures to improve the efficiency of product distribution 62
3.1 Opening of a warehouse in Severodvinsk 62
3.2 Expansion of distribution channels 66
conclusion 72
List of used literature 77
Introduction
Trade is one of the most important areas of activity in which the interests of many industries, enterprises and the population intersect.
Today, enterprises operate in different spheres and sectors of the economy (industry, agriculture, trade, etc.); they can engage in one type of activity or several. It is enterprises that produce, sell goods, carry out work and services, or other types of commercial activities. All this suggests that the enterprise is the primary, main link in social production.
In the context of the transition to market relations, the improvement of trade organization, the introduction of scientific and technical achievements and modern technologies, and the selection of the most effective ones have become important.
The relevance of the chosen topic lies in the fact that in modern conditions the requirements for the organization of trade are increasing due to the expansion of the range, the complication of economic relations with other sectors of the national economy, the widespread introduction of scientific and technological progress into trade, the expansion of the geography of production, the development and improvement of material technical basis of trade, which requires a more in-depth analysis.
The essence of the organization is to streamline the interactions of various parties and aspects of the material activities of people aimed at achieving certain goals.
At the present stage of development of the national economy, in the conditions of already relatively established economic ties and a competitive environment, it becomes relevant to introduce new methods for promoting goods for the economy.
Both for the manufacturer and for any intermediary, modern, well-designed technology for the channel of promoting goods to the final consumer is now important, which reduces costs, expands opportunities for providing additional services and ultimately increases financial results, which allows you to win in the competition for the consumer.
In the conditions of the formation and development of a market economy, the problems of sales strategy and organization of an effective sales network become extremely important for suppliers. The subject of the work is the study of commodity distribution systems. Therefore, the object is the activities of the organization LLC "ARTIS T".
The main goal of the development of the trading industry is to improve its activities, ensure the effective demand of various categories of the population with high-quality goods and services in a wide range, and actively promote domestic goods on the domestic market.
In accordance with the developed program, the following tasks were set:
- consider the main problems of organizing trade in an enterprise;
- show the specifics of organizing trade;
- present methods for improving the organization of trade at an enterprise.
To explore this topic, the works and textbooks of the authors on the problems of product distribution in modern marketing were widely used as a theoretical and methodological basis for the study, materials from periodicals were also used, legislative acts were analyzed, and the specific results of the activities of modern enterprises were assessed.

1. Theoretical foundations of product distribution

1.1 Product in the marketing system

In a subsistence economy, things and goods were produced. A benefit is a thing or service that satisfies one or another human need. A benefit can appear in the form of a commodity, which is produced only through commodity production. A product differs from a good in that it satisfies a person’s need through exchange, i.e. through a deed of sale.

In the literature, benefits are often divided into economic and non-economic. Economic goods are goods that exist in limited quantities compared to the needs they satisfy. For example, air exists in unlimited quantity and is not an economic good.

An economic good intended for exchange is recognized as a commodity. At the same time, it is not necessary, as some modern Western economists believe, for a product to act as a result of labor. The main thing, they argue, is that the product is intended to satisfy a need through exchange.

Indeed, goods for which no labor is expended can take the form of a commodity (for example, uncultivated land) and be sold. But mainly benefits are created through the productive activities of people. According to the labor theory of value, a commodity is a product of labor intended to satisfy any human need through exchange, i.e. through purchase and sale. Not every thing or good (for example, water, air, etc.) capable of satisfying a particular need is a commodity.

Commodities do not include everything that satisfies human needs, but only the products of human labor. But the products of human labor have not always been and are goods. If a product is produced to satisfy one's needs, then it is not a commodity. The product of human labor becomes a commodity when it is produced to satisfy the needs of others, i.e. when it is produced for sale. In the process of carrying out the act of purchase and sale, individual members of society enter into separate relationships with each other. Consequently, a commodity is a social form of the product of labor.

Products may vary depending on the nature of the needs met. They are divided into the following types.

Interchangeable products. If the consumption of one of them increases, then the use of the other decreases.

Complementary products. They accompany each other, and the need for them simultaneously increases or decreases

Independent goods, or, in other words, not associated, “independent” goods. The needs for these things are in no way related to each other.

The product has two properties:

- consumer value

- exchange value

Consumer value is the main property of a product

When considering the essence of a product, it is necessary to distinguish its basic properties. The analysis of a product should begin with its consumer value. In this regard, a product is a thing that, due to its properties, satisfies certain human needs. Consumer value directly depends on the consumer properties of things.

The usefulness of a thing or service, due to its consumer properties, determines its consumer value. When purchasing a product (as a thing or service), a person makes an “assessment” of consumer values, “investigates” their quality, and compares the objective and subjective aspects of the use value of various goods and services. Thus, the use value of a product is a more capacious category compared to its utility.

The role of use value in the conditions of commodity production is that it is the material basis, the material carrier of social relations and the purpose of production, and it should be studied as social use value, since under the conditions of the social division of labor the product is produced not for consumption by the producer himself, but for others of people. Since social use value represents an intermediate link between production and consumption, its nature is important for the process of selling products throughout society. This, in turn, indicates a limited connection between use value and product quality, and therefore with production efficiency.

The historical trend in the evolution of use values is a significant expansion in the number of use values; in complicating the process of their creation, increasing the useful properties of traditional goods, increasing the quality and durability of most goods; creation of a growing number of consumer values in the form of commodity services, etc.

Use value is the ability of a product to satisfy a particular human need. This property is sometimes defined as the utility of a product. In this case, utility refers only to the ability of a product to satisfy human needs, regardless of its impact on human health.

There is no disagreement among economists when determining the use value of a product. But when determining the value of a product, they exist.

Cost and exchange value

When determining the value of a product, there are disagreements among economists. Some economists also call this property of a product value, understanding by this term the price factor, i.e. price. For them there is no difference between value and price.

1.2 Product movements in marketing

Today, when every manufacturing company is developing tactics and strategies for attracting business partners and trying to create its own infrastructure of product channels, there is a need to turn to intermediaries as organizers of product distribution. At the same time, economic calculations show that the use of intermediaries provides certain benefits. Intermediaries (freight forwarders) perform a wide range of services in the field of servicing material and information flows and the infrastructure of commodity channels. At the core of their activities, various marketing functions (transportation, storage, loading and unloading, inventory management, warehousing and order processing) are considered as interconnected and interacting elements of the system, which brings them success. The marketing concept is implemented through a product distribution system, the main elements of which are:

- technical means and transport infrastructure;

- material and technical base of forwarding, agency, brokerage, leasing and other companies related to the process of movement of goods;

- warehousing and equipment;

- information support and management tools.

The main link between production and consumption is transport, and therefore new technologies are associated with a change in the role of transport in the functioning of marketing systems.

Freight forwarding companies take on additional functions that precede or follow direct transportation. Such as: packaging, labeling, storage, sorting of cargo, registration and maintenance of accounts, determining the optimal route and type of transportation, monitoring the process of movement of cargo along the way.

The efficiency of performing a range of forwarding services involves the use of technologies that ensure the interconnected work of functional units, which allows for control of order fulfillment using a unified information system.

New tasks associated with the implementation of marketing principles require the creation of an appropriate communication infrastructure that allows collecting and transmitting information to system participants. Including: providing the company with modern information services, access to remote resources, prompt exchange of commercial information between suppliers, customers and intermediaries.

Information and communication networks are usually a set of hardware and software that form a node and are united by special communication channels. A node may include: a telegraph channel, a public telephone channel, a dedicated telephone channel, a dedicated digital switched channel, a satellite communication channel. With the help of such channels, a complete communication infrastructure of the company is formed. Marketing systems are impossible, first of all, without the introduction of modern technologies for recording marketing operations when processing cargo flows. The implementation of such systems allows you to automate the process of entering information about the movement of a specific physical unit of goods and significantly speed up the processing time of goods. Golubkov E.P. Marketing research: theory, methodology and practice. - M.: Publishing house “Finpress”, 2003.

Increasing complexity of production and increased competition in the 80s - 90s. of our century required a more precise linkage of marketing with the strategic goals of firms, as well as an intensification of the role of marketing in increasing the flexibility of firms and their ability to quickly respond to market signals.

In this regard, the main task of marketing has become the development of a carefully balanced and justified proposal that would help achieve the greatest efficiency of the company, increase its market share and gain advantages over competitors. For, as practice has shown, underestimation of the close connection of the marketing concept with an active market strategy has often led and leads to the fact that the purchase of raw materials, semi-finished products and components itself becomes an incentive to start producing a particular product without the proper demand for it.

In the current market situation, such an approach to product production is fraught with commercial failure. Of course, the focus on minimizing costs remains in force, as noted above, but only if the optimal level of combination of costs and profitability of fixed and working capital involved in the market strategy is found.

One of the main objectives of marketing is also to create an integrated effective system for regulating and controlling material and information flows, ensuring high quality delivery of products.

This task is closely related to the solution of such problems as: correspondence of material and information flows to each other; control over the material flow and transfer of data about it to a single center; determining the strategy and technology for the physical movement of goods; development of methods for managing goods movement operations; establishing standardization standards for semi-finished products and packaging; determining the volume of production, transportation and storage; discrepancy between intended goals and purchasing and production capabilities.

In accordance with modern marketing tasks, two types of marketing functions are distinguished: operational and coordination.

The operational nature of the functions is associated with the direct management of the movement of material assets in the sphere of supply, production and distribution and, in essence, differs little from the functions of traditional logistics support.

Functions in the supply sector include managing the movement of raw materials, individual parts or inventories of finished products from the supplier or point of purchase to production plants, warehouses or commercial storage facilities.

In the production phase, the marketing function becomes inventory management, which includes monitoring the movement of semi-finished products and components through all stages of the production process, as well as the movement of finished products to wholesale warehouses and retail markets.

Product distribution management functions cover the operational organization of the flow of final products from the manufacturing enterprise to consumers.

The functions of marketing coordination - logistics coordination include: identifying and analyzing the needs for material resources of various phases and parts of production; analysis of the markets in which the enterprise operates and forecasting the behavior of other sources of these markets; processing data regarding orders and client needs.

The listed marketing functions consist of coordinating supply and demand for a product. Within the framework of the coordination functions of marketing, another area has emerged - operational planning, dictated by the desire to reduce inventories without reducing the efficiency of production and sales activities of firms.

Its essence is that, based on the forecast of demand, adjusted later when real orders are received, transportation schedules and, in general, a procedure for managing inventories of finished products are developed, which ultimately determines production planning and the development of programs for supplying it with raw materials and components.

1.2.1 The essence of product distribution

Product distribution in marketing is a system that ensures the delivery of goods to points of sale at a precisely defined time and with the highest possible level of customer service. Foreign authors understand the movement of goods as systematic decision-making regarding the physical movement and transfer of ownership of a product or service from producer to consumer, including transportation, storage and transactions.

The continuous movement of goods from production to consumer is an objectively necessary process of reproduction. In its content, it is a material process of moving in time and space ready-to-consume labor products that have certain physical and mechanical properties. The quantity of goods moved is measured in physical and value terms, which express information about the movement of goods.

The most accepted indicators characterizing the flow of goods are freight turnover and trade turnover. Information about ongoing processes in value terms allows you to create an economic model that reflects the movement of the value of a product. Physical indicators reflect information about the actual movement of goods.

Thus, the process of commodity circulation is considered in two aspects. Firstly, as a technological system, representing the material flow of goods and, secondly, as a cybernetic system, representing the flows and processes of processing economic (commercial information), since the task of studying the complex process of commodity circulation is, on the one hand, the rational construction of technological structures, and on the other hand, mastery of process management methods. Studying the complex process of product distribution requires a clear definition of the goals (target instructions) of the system and the means of achieving them. Bringing a product from the manufacturer to the consumer means organizing its movement in a practical way, with minimal total costs, at the time necessary for the consumer, in a given quantity, and in a condition suitable for retail sale and consumption.

If we provide the entire process of movement of goods in the form of a specific diagram with many inputs and outputs, where the receipt of specific goods is designated as inputs, and the points that sell these goods are designated as inputs, then the important functional role of the system will be visible: the transformation of the production range into trade and quantitative regrouping of commodity flows and shipments of them to the consumer.

Merchandising is the activity of planning, executing and controlling the physical movement of materials and finished products from their places of origin to their places of use in order to satisfy consumer paths and to their own benefit.

Product distribution includes: transportation, order processing, packaging and processing of goods, inventory maintenance, warehousing, any form of information about a product or service, distribution and marketing of products.

Among the listed elements of product distribution, three are particularly highlighted: transportation, storage, contacts with consumers.

The costs of goods distribution are determined by the method of transportation, the volume of warehouses, and the number of intermediate links in the system. When making decisions to improve any link in the product distribution system, it is necessary to ensure that this does not negatively affect the overall effect, especially if the measure is aimed at minimizing the costs of product distribution.

Managers consider merchandising to be a key element of the marketing mix due to its critical role in creating the effects of time, space and ownership. Surveys among organizations show that when evaluating suppliers, the second factor (after product quality) is product distribution. For many buyers, the decisive factor when choosing a supplier is not the lowest price, but the guarantee of timely delivery and reliable service.

Each manufacturer strives to form its own distribution channel through direct contact with consumption, which is preferable, or through an intermediary.

Direct contact between the manufacturer and the consumer offers delivery of goods to the buyer directly, bypassing marketing intermediaries or through its own distribution network. The advantage of this method of communication between the seller and the buyer is that the company manages the entire process of product distribution and has clear feedback from the buyer. This sales system is very useful for single production. In mass production, a company can organize branches of distribution channels. In the mass type of production, the manufacturing company uses the services of intermediaries, sales agents, retailers, and dealers.

Goods distribution is associated with a number of additional costs caused by the movement of goods from the manufacturer to the buyer. They can be combined into three groups:

1 - from the store (warehouse) to the seller to the sender’s station;

2 - from the sender station to the destination station;

3 - from the destination station to the buyer's store.

The most significant expenses of the second group include: freight charges or freight and insurance. Freight charges are charged for the carriage of goods. In addition, additional fees are charged for loading, unloading, weighing and storage, and for repairing containers (packaging).

The main costs of goods distribution consist of transportation costs, subsequent warehousing of goods, maintaining inventories, receiving, shipping and packaging of goods, administrative costs and order processing costs.

1.2.2 Goals of product distribution

Many companies set the goal of product distribution to ensure the delivery of the right goods to the right places at the right time at the lowest possible cost. Unfortunately, none of the product distribution systems is able to simultaneously provide maximum service for customers and reduce the costs of distribution of goods to a minimum.

Maximum customer service involves maintaining large inventories, an impeccable transportation system and multiple warehouses. But all this contributes to an increase in distribution costs.

Focusing on cost reduction implies a low-cost transportation system, maintaining small inventories and having a small number of warehouses.

The costs of commodity distribution are often interrelated in inverse proportion.

The manager of the forwarding and transport service prefers, in all possible cases, to ship goods by rail rather than by plane. This reduces the company's transportation costs. However, slower rail speeds mean working capital is tied up longer, customer payments are delayed, and delivery may force customers to purchase from competitors offering shorter lead times.

- To keep costs to a minimum, the shipping department uses low-cost containers. This leads to numerous damages to the goods during transit and causes dissatisfaction among consumers.

The inventory manager prefers to keep small inventories in order to reduce the cost of holding them. However, at the same time, cases of lack of goods in stock are becoming more frequent, the number of unfulfilled orders is growing, the volume of clerical work is increasing, there is a need to produce unplanned batches of goods and the use of expensive means of expedited delivery. Considering that activities related to organizing product distribution involve large compromises, a systematic approach to making such decisions is necessary.

The starting point for creating a product distribution system is to study customer needs and competitors' offers. Consumers are interested in:

1) timely delivery of goods,

2) the supplier’s willingness to satisfy the client’s emergency needs,

3) careful handling of goods during loading and unloading operations,

4) the supplier’s willingness to accept back defective goods and quickly replace them,

5) the supplier's willingness to maintain inventory for the sake of the client.

The firm needs to examine the relative importance of these types of services in the eyes of customers. When developing its own maintenance standards, a company must take into account the standards of its competitors. Typically, it will want to provide customers with at least the same level of service as its competitors. However, the main goal is to maximize profits, not sales. Therefore, the company should think about what costs the organization of high-level service will entail. Some companies offer more modest services, but at low prices. Others offer more services than their competitors, but charge a premium to cover higher costs. Be that as it may, the company must formulate the goals of its product distribution system, which can guide the planning process. Sometimes firms go even further, developing standards for each component of the service system.

Having developed a set of product distribution goals, the company begins to form a product distribution system that will ensure the achievement of these goals with minimal costs. In this case, decisions must be made on the following main issues:

1. How should you work with customers? (order processing)

2. Where should inventory be stored? (warehousing)

3. How much stock should you always have on hand? (inventory)

4. How should goods be shipped? (transportation)

1.2.3 Product distribution system

Placing an order - product distribution begins with receiving an order from the client. The order department prepares invoices and sends them to different departments of the company. Products that are out of stock are recorded as backorder. Shipped products are accompanied by shipping and payment documentation. Copies of shipping and payment documents are sent to various departments of the company.

Both the company and consumers benefit if all these actions are carried out quickly and accurately.

Warehousing - any company has to store goods until they are sold. Storage organization is necessary because production and consumption cycles rarely coincide with each other. Many agricultural products are produced seasonally, although the demand for them is constant. Organization of warehousing helps eliminate these contradictions.

The company needs to decide on the desired number of storage points. The more such points there are, the faster the goods can be delivered to consumers. However, at the same time, costs increase. The decision on the number of storage points must be made by linking the problems of the level of service for consumers and distribution costs.

Some companies store part of their inventory on site or near it, and the rest in warehouses in different parts of the country. A company can either have its own warehouses or rent space in public warehouses. The degree of control is higher if the company has its own warehouses. However, in this case, warehouses tie up capital, and if it is necessary to change storage locations, the company cannot react flexibly enough. On the other hand, public warehouses not only charge a fee for the space rented by the company, but also provide additional (paid) services for inspecting goods, packaging them, shipping them, and issuing invoices. By using the services of public warehouses, the company has a wide choice of both storage locations and types of storage facilities. Firms use long-term storage warehouses and transit warehouses. In long-term storage warehouses, goods are stored for a medium or long period of time. Inventory maintenance - deciding on inventory levels is another merchandising decision that affects customer satisfaction. The marketer would like the company to have sufficient inventories of goods to immediately fulfill all customer orders.

Transportation - Marketers need to be interested in what decisions their firms make regarding the transportation of goods. The choice of carrier determines the price level of goods, the timeliness of their delivery, and the condition of the goods at the time of their arrival at their destinations. But this in turn will affect the degree of consumer satisfaction. When shipping goods to warehouses, dealers and consumers, the company can choose from five types of transport: rail, water, road. pipeline and air.

The structure of the company's product distribution management - it is now clear that decisions about warehousing, maintaining inventories and transportation require the most careful coordination. More and more companies are establishing permanent committees, which include managers responsible for various aspects of the organization of product distribution. Such a committee develops basic guidelines to improve the efficiency of the distribution system as a whole. The main thing is that the company coordinates its activities in organizing product distribution and marketing activities in such a way as to provide the market with a high degree of satisfaction at moderate costs on its part.

1.3 Product distribution channels

1.3.1 Functions of distribution channels

Most manufacturers offer their products to the market through intermediaries. Each of them strives to form their own distribution channel.

A distribution channel is when a set of firms or help transfer to someone else the ownership of a specific product or service on its way from producer to consumer.

Channels for the movement of goods and money are the ways and means of distributing goods from producers to consumers and monetary payment from consumers to producers.

Distribution channels are the routes by which goods and services move through intermediate agents or directly to the consumer.

A distribution channel is a collection of firms or individuals that take over or help transfer ownership of a particular product or service and its path from producer to consumer.

Functions of the distribution channel

A distribution channel is the path along which goods move from producers to consumers. It eliminates long-standing gaps in time, place and ownership that separate goods and services from those who would use them. Members of the distribution channel perform a number of very important functions.

Table 1.1

Functions of distribution channels

1. Research work	collecting information necessary for planning and facilitating exchange
2. Sales promotion	creation and distribution of persuasive communications about the product
3. Establishing contacts	establishing and maintaining contact with potential buyers
4. Product adaptation	customization of goods to customer requirements. This applies to activities such as production, sorting, assembly and packaging.
5. Negotiations	attempts to negotiate prices and other conditions for the subsequent implementation of the act of transfer of property or possession.
6.Organization of product distribution	transportation and storage of goods.
7. Financing	finding and using funds to cover the costs of operating the channel.
8. Taking risks	taking responsibility for the functioning of the channel

The fulfillment of the first five functions contributes to the conclusion of transactions, and the remaining three - the completion of already concluded transactions.

The question is not whether these functions need to be performed - they must, and necessarily - but rather who should perform them.

All these functions have three common properties: they absorb scarce resources, can often be performed better through specialization, and can be performed by different channel members. If some of them are performed by the manufacturer, his costs rise accordingly, which means prices should be higher.

When transferring some functions to intermediaries, the costs, and therefore the manufacturer's prices, are lower. Intermediaries in this case must charge an additional fee to cover their costs of organizing the work.

The question of who should perform the various functions inherent in a channel is essentially a question of relative effectiveness and efficiency. If the opportunity arises to perform functions more effectively, the channel will be restructured accordingly.

1.3.2 Types of distribution channels

There are several types of distribution channels:

- wholesale trade;

- mailing;

- specialized stores;

- retail trade;

- service stations and others.

Promotion of a company's product in international markets can be carried out through its own sales organizations directly to the consumer or through foreign marketing intermediaries. The direct delivery of goods from the manufacturer to the consumer is called physical placement.

It includes three components:

- creation of a warehouse,

- transportation,

- logistics management.

Marketing intermediaries may act as inside sales agents or dealers. The difference between agents and dealers is that agents are not directly involved in the sale of goods, but only facilitate the conclusion of transactions. Dealers make wholesale purchases of goods and bear all costs associated with the sale and placement of goods through distribution channels. This especially applies to the business of small firms entering international markets for the first time. Large firms are less likely to use wholesale foreign buyers, since in doing so they lose control over distribution channels.

The actual promotion of goods on the international market, as on the national market, includes four elements:

- advertising,

- individual sale,

- promoting goods from manufacturer to consumer.

- publicity.

The promotion mechanism consists of introducing a new product, increasing sales of existing products, and identifying new customer needs.

The decision to select a distribution channel is one of the most difficult decisions management must make. The channels a company chooses directly influence all other marketing decisions.

Product distribution channels can be characterized by the number of levels that comprise them.

The distribution channel level is any intermediary who performs one or another work to bring the product and ownership of it closer to the final buyer. Since both the manufacturer himself and the end consumer perform certain work, they are also part of any channel. The length of the channel is indicated by the number of intermediate levels present in it.

The zero-tier channel (also called the direct marketing channel) consists of a manufacturer selling a product directly to consumers. A single-level channel includes one intermediary. In consumer markets, this intermediary is usually a retailer, while in industrial markets it is often a sales agent or broker.

A two-level channel includes two intermediaries. In consumer markets, such intermediaries are usually wholesalers and retailers; in industrial goods markets, these intermediaries can be industrial distributors and dealers.

A three-level channel includes three intermediaries. For example, in the meat processing industry, a small wholesaler usually stands between the wholesaler and the retailer. Small wholesalers buy goods from large wholesalers and resell them to small retailers that large wholesalers typically do not service.

There are channels with a large number of levels, but they are less common. From the manufacturers' point of view, the more layers a distribution channel has, the less control there is over it.

Distribution channels are characterized by their level of integration, width and length. There are two levels of integration - vertical and horizontal.

Vertical - when the manufacturer teams up with an intermediary. Horizontal - acquisition of competitors' horizontal distribution channels.

One of the most significant recent developments has been the emergence of vertical marketing systems that challenge traditional distribution channels. A typical traditional distribution channel consists of an independent manufacturer, one or more wholesalers, and one or more retailers. Each channel member is a separate enterprise, striving to ensure the maximum possible profits, even to the detriment of maximum profit for the system as a whole. None of the channel members has complete or sufficiently complete control over the activities of the other members.

A vertical marketing system (VMS), on the other hand, consists of a manufacturer, one or more wholesalers, and one or more retailers operating as a single system. In this case, one of the channel members either owns the others, provides them with trading privileges, or has the power to ensure their full cooperation. The dominant force within the BMC may be either the manufacturer, the wholesaler, or the retailer. The Navy arose as a means of controlling the behavior of the channel and preventing conflicts between its individual members pursuing their own goals. IUDs are economical in size, have great bargaining power, and eliminate duplication of effort. IUDs have become the predominant form of distribution in consumer marketing, where they already cover 64% of the total market.

There are three main types of IUDs.

Table 1.2

Types of Vertical Marketing System

Navy name:	Contents of the Navy:
1.CORPORATE Navy	The successive stages of production and distribution are under single ownership.
2. CONTRACTUAL IUDS	Consists of independent firms bound by contractual relationships and coordinating their business programs to jointly achieve greater savings and/or greater business results than could be achieved alone. Contractual IUDs have become widespread recently and are one of the significant phenomena in economic life.
3.CONTROLLED IUD	Coordinates the activities of a number of successive stages of production and distribution, not because of common ownership of one owner, but due to the size and power of one of its participants.

Voluntary chains of retailers under the auspices of wholesalers Wholesalers organize voluntary associations of independent retailers into chains that should help them compete with large distribution networks.

Retailer cooperatives. Retailers can take the initiative into their own hands and organize a new independent business association that will deal with wholesale operations and, possibly, production. The members of the association will make their main purchases through the cooperative and jointly plan advertising activities. The profit received is distributed among the members of the cooperative in proportion to the volume of purchases they make.

Organization of privilege holders. A channel member, called a franchise owner, can bring together a number of successive steps in the production and distribution process. The practice of issuing trading privileges, which has rapidly spread in recent years, is one of the most interesting phenomena in the retail industry.

MANAGED BUD - The manufacturer of a leading branded product is able to achieve cooperation and strong support from intermediate sellers of this product. Another phenomenon inherent in distribution channels is the willingness of two or more firms to join forces in jointly developing marketing opportunities. An individual firm either lacks the capital, technical expertise, production capacity, or marketing resources to go it alone, is afraid to take risks, or sees significant benefits for itself in joining forces with another firm. Firms can cooperate on a temporary or permanent basis, or they can create a separate joint company. Firms are increasingly turning to multi-channel marketing systems to reach the same or different markets.

The width of the channel determines the number of independent participants at any stage of product distribution. With a narrow channel, manufacturers sell goods through several sales participants, with a wide channel - through many.

To strengthen the position of its product in the market, the manufacturer carries out horizontal integration and acquires distribution channels of similar specialization.

Consumer goods companies, which cannot afford the risk of out-of-stock due to poor product control or late delivery, must also attach great importance to distribution channels.

1.3.3 Competition in distribution channels

Between participants in the same channel, as well as between different channels, varying degrees of cooperation, conflicts, and competition can be observed.

Collaboration typically occurs between members of the same channel. Manufacturers, wholesalers and retailers help each other, and their cooperation usually brings more profits to everyone than each of them could earn separately.

Through collaboration, they gain greater insight, better service, and greater satisfaction to their target market.

Competition occurs between firms and systems trying to serve the same target markets.

In essence, the relationships between the elements that make up a distribution channel are no different from the relationships between the elements of any other organizational structure. Any organization is a mixture of conflict and cooperation.

It consists of people and departments united and agreed to certain restrictions on freedom of action in order to achieve a specific common goal.

However, each of the elements comes to the organization with its own individual interests and goals, which in many cases conflict with the interests and goals of other elements of that organization, and to some extent the overall goals of the entire organization.

1.3.4 Distribution channel management

Based on the results of studying the main channel options, the company decides on its most effective structure. Now comes the task of managing the selected channel. Channel management requires the selection and motivation of individual intermediaries, as well as subsequent evaluation of their performance.

Selection of channel participants - manufacturers differ from each other in their ability to attract qualified intermediaries to work. Some people don't have any problems.

Motivating channel participants is the most progressive method of activity - distribution planning.

Assessing the performance of channel participants - the manufacturer must periodically evaluate the work of distributors on such indicators as meeting sales targets, maintaining average inventory levels, prompt delivery of goods to consumers, attitude towards damaged and missing goods, cooperation with the company in implementing sales promotion programs and training programs, and the set of services that the intermediary must provide to consumers.

Typically, the manufacturer assigns certain sales standards to intermediaries. After the next scheduled period, he can send out to all intermediaries a summary of the trading performance of each of them.

This summary should give the laggards an incentive to work better, and the advanced ones to maintain the successes they have achieved. The trading performance of intermediaries can also be compared with their own performance for previous periods.

The average percentage increase in indicators for the group as a whole can be considered the norm.

Manufacturers must be sensitive to their dealers. Anyone who does not pay due attention to mediators risks losing their support and ending up in trouble with the law.

Both administrators and sales specialists often take too narrow a view of the problem of distribution channels. Many of them consider the term “distribution channels” as a set of relationships between an industrial company and trading enterprises that are not part of its structure, through which the goods produced by the company enter the market.

At the same time, that part of the organizational structure of the manufacturer of goods itself, which is involved in sales, slips out of sight.

In a broader sense, sales organization refers to both the company’s own system of sales bodies and independent agents or enterprises that are not related to it and are involved in the sale of its goods.

From this point of view, the complex of external relationships can be considered as a continuation of the industrial company’s own sales bodies.

The elements that make up distribution channels must not only be selected, but also their relationships with suppliers and among themselves must be managed.

External marketing staff should be informed and trained; measures must be taken to stimulate its business activity and compensate for services. His work must be constantly monitored and directed.

1.3.5 Planning and organization of distribution channels

It is unlikely that sales executives have ever faced the task of rebuilding an entire distribution channel system. Much more often there is a need to adapt an existing system to changing market conditions or sales goals.

The work of adapting an existing channel is naturally more difficult than creating a new system. Even in the early stages of planning and analysis, the sales manager will likely find that his thinking is influenced by a tendency to assume that the existing structure is the right one.

Imagining the system of distribution channels he requires, he is faced with the inevitability of such a profound breakdown of existing sales bodies, which will inevitably lead to a serious decrease in sales volume, a deterioration in the position of his company in the market and a drop in profits.

In many cases, you have to act carefully and gradually build a new sales structure in parts and over a considerable period of time.

1.3.6 Factors influencing the choice of distribution channels

Factors taken into account by the supplier of goods when selecting a sales agent

Sales volume. The supplier prefers to deal with a sales agent whose sales volume is large enough and who can bear the costs of maintaining a relatively large and well-equipped enterprise that can provide the appropriate level of quality in sales activities.

Quality of sales personnel. Under normal circumstances, all sales activities of an agent are carried out by a small number of personnel, who must be sufficiently qualified and energetic.

If there are too many items in a case, it creates the problem of many disparate case lots. And if there are too few units in a box, the manufacturer is unable to set a high enough quantity discount. In addition, the costs of the intermediary for processing the goods increase.

Advertising. The supplier can use advertising as a means of inducing the intermediary to cooperate more actively. This process begins with the preparation of the advertising messages and materials themselves. The intermediary will approach their assessment from one point of view: how much they can help him in selling the goods of this supplier.

1.3.7 Strategy for the formation and development of distribution channels

The strategy for the formation and development of distribution channels takes into account:

- requirements for the sales network in this market segment;

- organizational structure of the sales system of your enterprise;

- level of qualification of commercial personnel;

- experience of the enterprise’s sales network in this market segment;

- assessing the feasibility of using the services of an intermediary;

- types and number of intermediaries accepted on the market;

- the possibility of increasing sales volume with the help of intermediaries;

- the policy of intermediaries in relation to your company;

- the ability of the enterprise’s financial resources to create a sales system;

- the degree of effectiveness of your own sales system compared to alternative opportunities;

- compliance of new production with the organizational sales structure of the enterprise;

- current market practices and customs of supply;

- number of potential consumers;

- geographical concentration of sales;

- habits and preferences of end consumers;

- size of individual orders;

- divisibility of goods;

- variability and instability of the product (from the point of view of its storage);

- the volume of services provided by the enterprise to the buyer;

- the degree of management’s desire to control distribution channels, etc.

2. analysis of product distribution and main performance indicators of Artis T LLC

2.1 General characteristics of the enterprise

The object of study of this thesis is the limited liability company "ARTIS T". This form of ownership is easy to implement and convenient. Participants in a given company may alienate their shares without the consent of their shareholders. In the event of bankruptcy, as well as under concluded agreements, each participant is liable in the amount of the value of the shares they own. The authorized capital is made up of the nominal value of the company's shares acquired by shareholders.

ARTIS T LLC was established in 1998 in Vologda. Gradually, the company expanded its activities and today has its branches in the Arkhangelsk, Yaroslavl regions and also in the city of Veliky Ustyug. The company has established itself in the target market for production, sales and intermediary services. In 2007, it entered into a direct agreement with the investment company Iceberry-Nord, within the framework of which, on the basis of the subsidiary, production was increased from four line flows to twenty-four. The result was an increase in the volume of the main product produced - ice cream. Plus, this partnership made it possible to strengthen the work of the delivery department. In particular, the delivery department's fleet of vehicles was updated from four refrigerated vehicles to eight in each region.

As part of its production and sales activities, the company is engaged in the production and storage of ice cream. The company owns such brands as:

- “Real Vologda ice cream”;

- "Father Frost";

- “Iceberry”.

Also, by the nature of its intermediary services, the company is a distributor of many leading companies on the Russian market of frozen semi-finished products (FFF). The ZPF brand portfolio includes the following brands:

- “Kolpinskie”: dumplings, cutlets, meatballs, pancakes;

- “Maryushka”: dumplings;

- “5 minutes”: dumplings, minced meat;

- “Baby”: dumplings;

- “Morozko”: pizza, pancakes, pizza base, dough, dumplings;

- “Vichi”: crab sticks, crab meat;

- “Golden Cockerel”: breaded chicken cutlets and sticks;

- “Bauer”: frozen vegetable mixtures and fruits.

Despite the fact that the range of ARTIS T LLC is wide, it is designed in such a way as to satisfy the needs (demand) of customers in different areas.

The main sales markets of the Arkhangelsk branch, in addition to small retail, are such key networks as:

- “Quarter”;

- "Disma";

- "Chamomile";

- “Guarantor”;

- “Kopeyka”;

- “Continent”;

- "Golden Sands";

- “Dvinsk Compound”.

The management of the enterprise is carried out according to the approved organizational chart, which is presented in Fig. 2.1; a linear management structure has been created at the enterprise.

Production workshop ice cream
Transport workshop

Fig. 2.1 Organizational structure of the enterprise

Today, the organization is growing and expanding in terms of the number of partners. New types of products are appearing, new sales methods are being developed for more effective promotion of goods.

The foundations of linear structures are the so-called “mine” principle of constructing and specializing the management process according to the functional subsystems of the organization (marketing, production, research and development, finance, personnel, etc.). For each subsystem, a hierarchy of services (“mine”) is formed, permeating the entire organization from top to bottom. The results of the work of each service are assessed by indicators characterizing the fulfillment of their goals and objectives.

Advantages of a linear structure:

- personal responsibility of the manager for the final results of the enterprise and others;

- a clear system of mutual connections between functions and departments;

- a clear system of unity of command - one leader concentrates in his hands the management of the entire set of processes that have a common goal;

- quick response of executive units to direct instructions from superiors.

At the head of the enterprise is the general director, who carries out the general management of the enterprise (for example, enters into contracts for the supply of products to organizations and institutions, attends conferences, is responsible for the supply of equipment in case of wear and technical aging). The deputy for personnel, the commercial director and the chief mechanic are directly subordinate to him, who in turn manage the departments entrusted to them.

The chief mechanic of the enterprise reports to the general director. He directly manages the vehicle repair department. The main functions of the chief mechanic are:

- ensuring the operation of the enterprise’s vehicles;

- organizing the release of rolling stock onto the line;

- monitoring compliance by drivers with the rules of technical operation of vehicles;

- control over the provision of fuels and lubricants, timely maintenance and proper storage of rolling stock.

The Deputy General Director for Commercial Affairs reports to the General Director of the enterprise. Its main functions are:

- management of entrusted departments;

- management of the financial and economic activities of the enterprise;

- control over the logistics of the enterprise, financial and economic performance indicators of the enterprise, the correct use of a bank loan, fulfillment of contractual obligations for the supply of products;

- coordination of the work of subordinate services and units;

- interaction with other enterprises in the process of performing functional duties.

There are 3 structural divisions under his control. Let's consider the main functions of these divisions.

Accounting.

The accounting department includes an accountant and a cashier; the accounting department is managed by the chief accountant.

The main functions of accounting are:

- organization of accounting of economic and financial activities and control over the economical use of material, labor and financial resources, safety of the enterprise’s property;

- formulate an accounting policy in accordance with accounting legislation, based on the structure and characteristics of the enterprise’s activities, the need to ensure its financial stability;

Organization of accounting of property, liabilities and business transactions, incoming fixed assets. Inventory assets and cash, timely reflection on the accounting accounts of transactions related to their movement, accounting for production and distribution costs, execution of cost estimates, sales of products, performance of services, results of the economic and financial activities of the enterprise, as well as financial, settlement and credit operations;

- ensuring the preparation of balance sheets and operational summary reports on income and expenses of funds, on the use of the budget, other accounting and statistical reporting, submitting them in the prescribed manner to the relevant authorities.

The head of the supply department manages the wholesale department.

The main functions of managers are:

- carry out work to provide the enterprise with all the goods necessary for its activities and their rational use;

- determine the enterprise’s need for goods and services;

- conduct contractual work on the formation and expansion of economic relations with suppliers and buyers;

- monitor the fulfillment of contractual obligations by suppliers, the quantity and quality of incoming goods;

- participate in setting prices for goods and services;

- keep operational records of the movement of material resources and the availability of inventory.

The production department is located in the head office in Vologda, the main functions of which are purchasing raw materials for ice cream production, maintaining production lines, taking samples, sending goods to regions.

The marketing department consists of the head of the marketing department, who provides general management of the department, and a marketer. The main functions of the marketing department are:

- monitor market conditions, product range, competitive environment;

- development of advertising policy.

Each region has a sales manager on its staff, who organizes the activities of sales representatives, the transport department, warehouse workers, and generates requests for the warehouses of his branch. His functions also include drawing up a budget plan for a month of work, which includes various expenses for the transport department and the sales department.

Sales representatives are engaged in expanding the sales territory of goods by signing supply agreements with wholesale departments and retail chains. Each territory is assigned to a specific sales representative, who delivers the goods and also collects funds for accounts receivable.

Merchandisers are assigned to a specific sales representative, whose function is to ensure proper display of goods in refrigeration equipment.

Operators participate in the collection and processing of applications received from sales representatives, and are involved in the formation of a price list and prices for goods.

The HR department carries out recruitment work and also improves the qualifications of employees.

It should be noted that some functions, such as personnel certification and advanced training, are not carried out at the proper level and not regularly. Personnel assessment is carried out mainly during hiring, during interviews and assessment of personal data. The assessment is usually carried out by the HR manager and is purely subjective. The costs of implementing personnel management functions are insignificant, since all functions are implemented in-house, but the quality level of their implementation suffers from this.

The company uses the indirect influence method. The boss creates conditions for achieving goals, and employees achieve results. The goal of the organization is customer satisfaction in a quality product, excellent service and at the same time making a profit.

The company uses the following methods of personnel management: administrative, economic and socio-psychological.

- administrative - issuance of orders, instructions; selection and placement of personnel; development of job descriptions; establishment of administrative sanctions and incentives;

Economic - technical and economic analysis; planning; pricing; taxation; economic method of management when there is a material interest of managers. The manager uses various methods to achieve results; the economic method is the most effective, since there is a direct relationship: the more products he sold, the more profit he made.

- socio-psychological - social analysis in a team; creating a creative atmosphere in the team; participation of workers in management; creation of a normal psychological climate; development of initiative among employees.

Administrative methods are used in their work by the general and commercial directors, as well as heads of services and departments when selecting personnel.

Economic methods are used mainly by employees of the financial department and accounting department.

All managers, as well as the company employees themselves, use social and psychological methods.

Personnel are the greatest asset of the company. The company strives to create all conditions, and its personnel strive to work as efficiently as possible.

Management in the company is built on a democratic style. It means:

- collective participation of employees in company decision-making;

- clear interaction between employees;

- orientation to the developed company strategy;

- better opportunities to demonstrate personal abilities and creative potential;

- development of responsibility and self-affirmation of performers;

- ensuring self-control during tasks.

The organizational structure of the Arkhangelsk branch is built on principles similar to the general strategy of the company, i.e. has a linear-functional management structure. In Fig. 2.2 we present the organizational structure of the Arkhangelsk branch of the company.

Rice. 2.2 Management structure of the Arkhangelsk branch of Artis T LLC

Management of the company's activities in the Arkhangelsk region is carried out centrally from the city of Arkhangelsk, all the company's personnel are located there, the company has large warehouses and a significant vehicle fleet.

Delivery of products to cities and other settlements of the Arkhangelsk region is carried out by employees of the Arkhangelsk branch; delivery of the company’s products to Arkhangelsk is carried out at the expense of the head office located in the city of Vologda.

Block 7. Distribution of goods and product movement

1. Essence and general characteristics of distribution channels

In a market economy, any company pays special attention to the problem of optimizing the process of promoting goods to consumers. Ultimately, the success of all its production activities and the conquest of its sector in the market depends on the results of product sales. Sometimes, with almost identical product characteristics, a company can beat its competitors at this stage, having managed to better implement its product.

Product distribution planning is the systematic decision-making regarding the physical movement and transfer of ownership of a good or service from producer to consumer, including transportation, storage and transactions.

Product distribution functions are carried out through distribution channels, which include all organizations or all people associated with the movement and exchange of goods and services, who are participants in distribution channels or intermediaries.

A distribution channel is the path along which goods move from producers to consumers. It eliminates long-standing gaps in time, place and ownership that separate goods and services from those who would use them. In other words, a distribution channel can be defined as a set of independent legal entities or individuals participating in the process of movement of goods from producer to consumer. These intermediate substances of commodity circulation are called intermediaries.

Why do manufacturers shift part of the work of selling goods to intermediaries? Indeed, as a result of such actions, the manufacturer cannot fully control to whom and how its products are sold. However, using their connections, experience, and the advantages of specialization, intermediaries can often bring more benefits to the manufacturer than if they sold their products independently. In Fig. 1 shows how producers save money when they use the services of intermediaries.

Rice. 1. Number of contacts for various options for distribution of goods

A – number of contacts without intermediaries
PR – manufacturer
PT – consumer
PS - intermediary
B – number of contacts with
intermediary

Part A shows three producers who use direct distribution channels to three consumers. Such a system involves nine different contacts between producers and consumers. Part B shows how three producers operate through one intermediary who interacts with three consumers. This circuit requires only six contacts.

Thus, the number of relationships is reduced by one third, which is extremely important in conditions of a large number of connections.

From an economic point of view, the task of resellers is to transform the range of products produced by the manufacturer into the range of goods needed by consumers. Manufacturers produce a limited range of products in huge quantities, while consumers need a wide range of goods in small quantities. Acting as a distribution channel, intermediaries purchase large quantities of goods from many manufacturers. Then they split this aggregate into small parts, which include the entire range of products needed by consumers. Thus, intermediaries play an important role in matching supply and demand.

Distribution channel members perform a number of very important functions:

1. Research work - collecting information necessary for planning and facilitating exchange.

2. Sales promotion – creation and distribution of persuasive communications about the product.

3. Establishing contacts – establishing and maintaining connections with potential buyers.

4. Adaptation of goods - adjustment of goods to customer requirements. This applies to activities such as production, sorting, assembly and packaging.

5. Negotiation - attempts to agree on prices and other conditions for the subsequent implementation of the act of transfer of property or possession.

6. Organization of goods distribution – transportation and warehousing of goods.

7. Financing – finding and using funds to cover the costs of operating the channel.

8. Taking risks – taking responsibility for the functioning of the channel.

As F. Kotler rightly notes, the question is not whether these functions need to be performed, but who will perform them. The manufacturer can eliminate or replace organizations in the channel system, but no function can be eliminated. When one of the channel participants is eliminated, its functions are transferred to either existing or newly created channel participants. The manufacturer may not resort to the services of intermediaries, but in this case he will perform all the functions himself. All of these functions require scarce resources and can be performed better through specialization. If the manufacturer independently performs these functions, then costs increase, and therefore the price of the product increases. When transferring a number of functions to intermediaries, the manufacturer's costs will be lower. However, intermediaries can themselves increase the price of goods to cover their distribution costs. Therefore, the main management decision of the manufacturer in the field of product distribution is the choice of the number of channel participants, in which the distribution of functions between them will minimize distribution costs while offering the required range of goods to the target market in a timely and high-quality manner.

Existing distribution channels involve the use of three main distribution methods:

Direct - the manufacturer of the product enters into direct relationships with its consumers and does not resort to the services of independent intermediaries;

Indirect – to organize the sale of its goods, it resorts to the services of various types of independent intermediaries;

Combined - organizations with mixed capital are used as an intermediary link, including both the funds of the manufacturing company and another independent company.

Distribution channels can be characterized by the number of levels that comprise them. The distribution channel level is any intermediary who performs one or another work to bring the product and ownership of it closer to the final buyer. Since both the manufacturer himself and the end consumer perform certain work, they are also part of any channel.

When choosing a distribution channel, decision making usually goes through several stages (Fig. 2.)

Rice. 2. Stages of decision-making on choosing a product distribution channel

One of the main stages under consideration is determining the parameters of the distribution channel. These parameters are length (extent) and width. The channel length refers to the number of intermediate links that perform the work of moving goods from producer to consumer.

A channel with a length equal to zero is called a channel direct marketing, because there are no intermediate links in it, it consists only of a seller and a consumer. Direct marketing itself is carried out using several methods (selling at home, by telephone, personal selling, etc.) and deserves separate consideration. The remaining channels are channels mediated marketing and can include from one to three or more levels.

A single-level channel includes one intermediary. In consumer markets, this intermediary is usually a retailer, while in industrial markets it is often a sales agent or broker.

A two-level channel includes two intermediaries. In consumer markets, such intermediaries are usually wholesalers and retailers; in industrial markets, these may be industrial distributors and dealers. A three-level channel includes three intermediaries.

There are channels with a large number of levels, but they are less common. From the manufacturers' point of view, the more layers a distribution channel has, the less control there is over it.

In Fig. Figure 3 shows typical product distribution channels with different lengths.

Rice. 3. Typical distribution channels

Another characteristic of the distribution channel is its width, i.e. the number of intermediaries at each level involved in the distribution of products. Therefore, any firm must decide how many intermediaries will be used at each level of the channel. There are three approaches to solving this problem.

With intensive distribution, manufacturers usually strive to ensure the availability of stocks of their goods in as many retail outlets as possible. For such goods, the convenience of the place of purchase is a must.

Exclusive or exclusive distribution means that a manufacturer gives a limited number of dealers exclusive rights to distribute the firm's products within their sales territories. In this case, the condition of exclusive dealership is often set, when the manufacturer requires that dealers selling its goods not sell the goods of competitors. By granting exclusive rights to distribute its product, the manufacturer hopes to organize more aggressive and sophisticated sales, as well as the possibility of greater control over the actions of the intermediary in the areas of pricing, incentives, credit transactions and the provision of various types of services. Exclusive distribution usually enhances the image of the product and allows higher markups to be made on it.

The selective distribution method is a cross between the intensive distribution and exclusive distribution methods. In this case, the number of intermediaries involved is more than one, but less than the total number of those ready to sell the product. The company does not need to disperse its efforts across many retail outlets, many of which are obviously secondary. It can establish good business relationships with selected intermediaries and expect above-average sales efforts from them. Selective distribution allows the manufacturer to achieve the required market coverage with greater control and at lower costs on its part than with intensive distribution.

The dependence of distribution intensity on product characteristics is presented in Table 1.

Table 1 Dependence of distribution intensity on product characteristics

2. Factors influencing the choice of distribution channel. Characteristics of the main
types of intermediaries

Decisions about choosing a distribution channel, its length, width are among the most difficult. A number of factors can be identified that influence this decision; however, in each specific case the decision may have its own specifics.

In general, among the factors influencing the choice of channel are the following:

1) the nature of the goods;
2) transportability of the goods;
3) geographical location of the manufacturer;
4) presence of competitors;
5) breadth of assortment;
6) storage conditions;
7) shelf life.

In general, we can say that the higher the mass consumption of a product, the wider the assortment, the more extensive the distribution network will be. However, factors such as storage conditions, shelf life, etc. may act as limiting factors here. This, in particular, applies to many food industry products, primarily bakery and dairy products, where shelf life of products is often limited to 24–36 hours. This, naturally, does not make it possible to use extensive distribution channels, although the mass consumption of these goods is very high. In an effort to take advantage of a wide distribution network, manufacturing companies use various additives in the production of their goods to increase the shelf life of goods several times. So today, many dairies produce products with a shelf life of up to 6 months.

Considering the main types of intermediaries, we can give the following characteristics.

Agent(broker, broker, commission agent, traveling salesman, etc.) - an individual or legal entity who carries out transactions or carries out business orders of another person at his expense and on his behalf, representing the interests of the buyer or seller on a relatively permanent basis, without taking over ownership of goods. The agent searches for potential buyers and sellers, organizes negotiations between them, prepares draft contracts, helps in formalizing the transfer of ownership of goods, advertises the product, and generates interest in purchasing the product.

Broker(appraiser, commission agent) – an individual or legal entity acting as an intermediary in concluding wholesale transactions between interested parties. Sometimes a broker may take ownership of the goods. For mediation, the broker receives a fee in the form of a certain percentage of the transaction amount or an absolute amount specified in advance in the contract.

Distributor- an individual or legal entity - a wholesale intermediary serving various industries, having warehouses and vehicles and carrying out commercial activities on its own behalf and at its own expense.

Commissioner- an intermediary in a transaction who makes transactions for a certain remuneration (commission), in favor and at the expense of the customer (client, but on his own behalf.

Committent- a person who gives instructions to another person (commission agent) to conclude a transaction with goods on behalf of the commission agent, but at the expense of the principal.

Traveling salesman– a traveling agent of a trading enterprise or company, offering customers goods according to the samples and catalogs he has.

Consignee- a wholesale merchant who receives goods from the guarantor and sells them from his warehouse and on his own behalf, for a fee that the guarantor pays to the consignor under the contract.

Broker– an intermediary in concluding transactions on real estate exchanges, stock and universal exchanges, performing transactions at the expense of clients and receiving remuneration in the form of commissions.

As you can see, all intermediaries can be combined into two large groups: 1) those who acquire ownership of the goods and have the right to influence prices (distributor, dealer); 2) acting on behalf and at the expense of the seller and not having the ability to influence prices (agent, broker, broker, commission agent, etc.).

Distributors are divided into 2 types:

1) owning or renting warehouse premises;

2) do not own or rent warehouse premises.

The latter are often called commercial brokers. Trade brokers usually deal with large cargo, the transportation and transfer of which is very labor-intensive.

The general classification of independent wholesale intermediaries is presented in Fig. 4.

Rice. 4.Classification of independent wholesale intermediaries

The manufacturer can sell the product directly to distributors, who then independently sell it to direct consumers. Choosing such a channel is effective if:

1) the market is scattered, and the volume of sales in each geographical area is insufficient to justify the costs of the direct distribution channel;

2) the product must be sold to consumers in many industries, which requires a wide network of wholesalers;

3) consumers prefer to purchase products in small quantities, which are inconvenient for warehouse and transit processing;

4) the difference between the cost of production and the selling price is too small for the manufacturer to maintain its own sales network.

Dependent intermediaries do not claim ownership of the goods they sell and work on a commission basis. The size of the remuneration depends on the volume and complexity of the transactions they make. Brokers and agents in developed countries account for about 9% of wholesale trade turnover. Classification of dependent intermediaries in Fig. 5.

Rice. 5. Classification of dependent intermediaries

The most common form of dependent intermediaries are sales agents, which are divided into industrial and sales. Industrial agents, as a rule, replace the sales service of the enterprise, but receive wages and commissions, which can range from 3 to 10% of sales volume. To a greater extent than all other intermediaries in this group, industrial agents depend on the instructions of the manufacturer. Industrial agents typically work for a single manufacturer and enjoy exclusive distribution rights in the surrounding area, so they can avoid conflict and have a fairly comprehensive product range. Large enterprises may have agents for each product group. Industrial agents have very limited influence on the manufacturer's marketing program and price level.

Sales agents deal with small businesses and are responsible for marketing all products.

Essentially, they become the marketing arm of the manufacturer and are empowered to negotiate prices and other terms of sale. Sales agents' offices are located in close proximity to the consumer.

Brokers bring buyers and sellers together to complete a transaction. They are well informed about the state of the market, sales conditions, price levels, and master the art of negotiation. In some cases, they can provide delivery and storage of products. For mediation between the buyer and seller, the broker receives a commission, usually from both parties to the transaction, which distinguishes him from other dependent intermediaries.

Commission agents receive products from manufacturers on the principles of consignment, which consists of instructing one party (the consignee) to the other party (the consignor) to sell goods from the warehouse on their own behalf, but at the expense of the seller. Commission agents have an office, as well as warehouses for storing and selling products. Commission agents can negotiate prices with consumers at intervals determined by the manufacturer.

Auctions – one of the types of sales enterprises operating in the market of antiques, luxury goods, as well as used equipment. Auction operating costs account for about 3% of total wholesale sales. Nevertheless, the auction form of trade in our country has favorable prospects, since our market for used equipment is quite significant.

To summarize, it should be noted that it is often advisable for enterprises to use different distribution channels. Thus, with a high concentration of consumers of homogeneous products in one region, a direct channel is rational; if they are scattered in another, sales using intermediaries is rational (see Fig. 6). A generalized description of distribution channels is presented in Table 2.

Table 2 Comparative characteristics of sales channels

Channel characteristics	Product distribution channels
	Direct	Indirect		Mixed
	Direct	wholesale companies	sales agents	Mixed
Market Sales volume Contacts with manufacturers Sales costs	Vertical Small Very tight The highest	Horizontal Minor	Vertical Lowest	Any Optimal
Price policy	Very flexible quickly taking into account market conditions	Flexible, quickly takes into account changes in the market	Not flexible enough, requires agreement on price changes with manufacturers	Overall flexible, satisfying consumer and manufacturer
Knowledge of the subject of sale	Excellent	Satisfactory	good	Optimal
Coverage area	Narrow, in a place where consumers are concentrated	Wide, throughout the market	Narrow, with several agents covering the entire market	The most complete
Ownership of the product during the sales process	From the manufacturer	At the intermediary	At the intermediary	Normal
Manufacturer's financial condition		Weak, average	Weak	Normal
Product Maintenance Capabilities	The highest	Low	Average	Normal
Profit rate	High	Low	Low	Average
Standardization level	Short	High	High, medium	Any
Reporting quality		Low	Lowest	Normal

Rice. 6. Mixed channels

3. Conflicts within distribution channels and possible ways to prevent them

Ideally, all members of a distribution channel should work closely together to maintain healthy profits and increase sales, since the success of each member depends on the success of the entire distribution channel. Participants must perform their functions, coordinate goals and actions, and cooperate with other participants to successfully achieve the goals of the entire distribution channel.

Unfortunately, individual channel participants do not always look at the problem so broadly. They often care about their own immediate goals and interactions with those companies with which they collaborate directly in the channel. Although distribution channel members are dependent on each other, they often operate separately in their own interests. Often they disagree with the role they play in the channel, and also with who should do what and for what reward. Such disagreements over goals and functions lead to conflicts within the distribution channel. Conflict can arise on two levels.

Horizontal is a conflict that arises between firms located at the same level of the distribution channel. An example is how some passenger car distributors complain about other distributors in the same city who are stealing customers from them by using more aggressive pricing and advertising or by selling outside their assigned territories. Such a conflict usually arises when distributors of cars, household appliances and other goods do not have the exclusive right to sell this product.

Vertical are called conflicts between different levels of the same distribution channel. An example of such a conflict between pharmaceutical manufacturers and distributors is given by F. Kotler.

It should be noted that some conflicts within channels are in the nature of healthy competition. In order for a channel to work well, it is necessary to clearly define the functions of each of its participants and manage conflict situations if they arise. This can be achieved by creating an organizational center in the distribution channel that has the authority to distribute functions and manage conflict situations.

Generally speaking, conflicts in the distribution channels of manufacturing products are less severe than in the consumer goods sector, since manufacturing companies do not use retail services and most conflicts arise between manufacturers and retail stores.

As a rule, the leader of the distribution channel is the manufacturer, as it is most interested in the proper functioning of the channel. Manufacturers have two main strategies for influencing intermediaries: push and pull. A push strategy aims to encourage wholesalers and retailers to stock a company's products, thereby pushing the product through the channel to the end consumer. They can offer resellers increased discounts on certain products, reimburse them for advertising expenses, organize competitions, and in-store exhibitions to help the retailer sell their product.

Pull strategies are designed to convince the consumer to come into the store and pull the product out of the distribution channel. For this purpose, advertising is used, providing free coupons, discounts, etc. “Pushing” strategies are used more widely by small companies that have not yet strengthened their position in the market, since in order to be sold, the product must first get into the store. Well-known companies, whose brands have a strong position in the market, use the “pull out” strategy more, because both wholesalers and retailers are more willing to deal with well-known brands.

4. Main trends in the development of goods distribution systems

One of the most significant recent developments has been the emergence of vertical marketing systems that challenge traditional distribution channels.

A typical traditional distribution channel consists of an independent manufacturer, one or more wholesalers, and one or more retailers. Each member of the channel is a separate enterprise, striving to ensure the maximum possible profits, even to the detriment of maximizing the profit of the system as a whole. None of the channel members has complete or sufficiently complete control over the activities of the other members. .

A vertical marketing system (VMS), on the other hand, consists of a manufacturer, one or more wholesalers, and one or more retailers operating as a single system. In this case, one of the channel members either owns the others, grants them trading privileges, or has the power to ensure their full cooperation. The dominant force within a vertical marketing system can be either the manufacturer, the wholesaler, or the retailer. The Navy arose as a means of controlling the behavior of the channel and preventing conflicts between its individual members pursuing their own goals. IUDs are economical in size, have great bargaining power, and eliminate duplication of effort.

Let's consider three main types of vertical marketing systems (Fig. 7).

Rice. 7. Main types of vertical marketing systems

1. Corporate Navy.
In a corporate BMC, the successive stages of production and distribution are solely owned. Such organizations are powerful vertically integrated systems.

2. Controlled IUDs.
A managed Navy coordinates the activities of a number of successive stages of production and distribution, not because of common ownership of one owner, but because of the size and power of one of its members. For example, a manufacturer of a leading branded product is able to obtain the cooperation and strong support of intermediate sellers of that product. Thus, the General Electric, Procterand Gamble, and Kraft corporations are able to achieve unusually close cooperation with intermediate sellers of their goods in organizing exhibitions, allocating retail space, carrying out incentive measures and formulating pricing policies.

3. Negotiated Navy.
A contractual BMC consists of independent firms bound by contractual relationships that coordinate their business programs to jointly achieve greater savings and greater business results than could be achieved alone. Contractual IUDs have become widespread recently and are one of the significant phenomena in economic life. There are three types of contractual IUDs.

One of them is voluntary chains of retailers under the auspices of wholesalers. In this case, wholesalers organize voluntary

linking independent retailers into chains that should help them compete with large distribution networks. The wholesaler is developing a program to standardize the trading practices of independent retailers and ensure cost-effective purchasing, which will enable the entire group to compete effectively with the chains.

Another type of contractual BMC is retailer cooperatives. Retailers can take the initiative into their own hands and organize a new independent business association that will deal with wholesale operations and possibly production. The members of the association will make their main purchases through the cooperative and jointly plan advertising activities. The profit received is distributed among the members of the cooperative in proportion to the volume of purchases they make. Retailers who are not members of the cooperative may also purchase through it, but do not participate in the distribution of profits.

The third type of contractual BMC is the organization of franchise holders. In this case, the channel member, called the franchise owner, can combine in his hands a number of successive stages of the production and distribution process. The practice of issuing trading privileges, which has recently become rapidly widespread, is one of the most interesting phenomena in the retail industry. Although the underlying idea behind this phenomenon has been around for a long time, some forms of privilege-based practice have emerged more recently. Three forms of privilege can be distinguished.

The first is the system of retail franchise holders under the auspices of the manufacturer, common in the automobile industry. For example, the Ford company issues licenses for the right to trade in its

vehicles to independent dealers who agree to adhere to certain terms and conditions of sales and service.

The second is a system of wholesalers-privilege holders under the auspices of the manufacturer, common in the soft drink trade. For example, the Coca-Cola company issues licenses for the right to wholesale trade in different markets to owners of bottling plants (wholesalers), who purchase beverage concentrate from it, carbonate it, bottle it and sell it to local retailers.

The third is a system of retail franchise holders under the auspices of a service firm. In this case, the service firm forms a complex system, the purpose of which is to deliver the service to consumers in the most effective way. Examples of such systems are found in the car rental industry, in the fast food service industry, and in the motel business.

In addition to vertical marketing systems, another phenomenon inherent in distribution channels has been the willingness of two or more firms to join forces in jointly pursuing marketing opportunities. Such integration is called horizontal marketing systems. In this case, the individual firm either lacks the capital, technical expertise, production capacity, or marketing resources to go it alone, is afraid to take risks, or sees significant benefits in joining forces with another firm. Firms can cooperate on a permanent or temporary basis, or they can create a separate joint company.

Firms are increasingly turning to multi-channel marketing systems to reach the same or different markets. Typically, multichannel marketing systems are used to serve different customers. For example, General Electric Corporation sells major appliances both through independent dealers and directly to large home building contractors.

5. Product distribution: essence and principles.

Having examined the general principles of distribution of goods, let us move directly to the system of commodity distribution as an activity associated with the movement of goods from the place of production to the place of sale or consumption. In a general sense, the product distribution system is a set of functions of order processing, loading and unloading, inventory creation, storage and transportation.

Purpose of the system– ensure timely shipment of goods and reliability of delivery, i.e. supply of goods on a regular basis, in the required form, required quality and quantity. Particular attention to the distribution system is required from wholesalers, since they are in the middle of the distribution channel and must manage the continuous flow of goods from manufacturers and sort them for delivery to the retail chain.

The importance of product distribution is evidenced by the costs of it, which, according to various researchers, range from 15 to 25% of sales. It should be noted that the average cost of advertising and sales promotion is significantly lower. Managers consider merchandising to be a key element of the marketing mix due to its critical role in creating the effects of time, space and ownership. Surveys among organizations show that when evaluating suppliers, the second factor (after product quality) is product distribution. For many buyers, the decisive factor when choosing a supplier is not the lowest price, but the guarantee of timely delivery and reliable service.

Consumer goods companies, which cannot afford the risk of out-of-stock due to poor product control or late delivery, must also attach great importance to product distribution. Consumers become less loyal to specific brands if they are often out of stock, and they begin to buy alternative products. Even the best advertising campaign and pricing strategy are useless if the company does not have an effective distribution system to ensure that the product is available at the right time in the right place.

Product distribution is associated with the infrastructure necessary to organize the flow of goods from producer to consumer. The use of poor transport means delays in the delivery of goods, poor telecommunications make it difficult to submit data and phone orders, a lack of refrigeration capacity causes product spoilage, and a lack of premises reduces the range of products. Possibilities for the distribution of goods in the country are formed under the influence of development trends in the international market: economic, political, social. Thus, the transition to a market economy in Russia and Eastern European countries involves a radical improvement in the transport system and telecommunications system, which will improve order processing and cargo transportation. The economic integration of the countries of the European Community also affects the commodity distribution system. The removal of trade barriers will speed up the standardization of distribution systems across countries. Unified transport rules based on Incomterms-90 are gradually being formed. Already today, a number of large companies are creating distribution centers in Europe with a wide computer network for processing orders and shipping goods throughout Europe.

6.Organization of the goods distribution process

The process of product distribution can be characterized by the sequential passage of a number of stages (Fig. 8).

Goals commodity circulation can be considered from 2 positions:
1) degree of customer satisfaction;
2) cost reduction.

The method of achieving the goals of the first group can be to minimize the occurrence of out-of-stocks and timely fulfillment of orders by creating an efficient transportation system. It is also important to minimize cases of cargo damage during transportation.

So, in relation to the assortment, the goals may be the following:

1) the inventory turnover period is no more than a month;
2) dispatch of goods within one day from receipt of the order;
3) 100% order fulfillment.

Goals regarding costs can also be specified, as a rule, by some value that should not be exceeded either by the total level of costs, or by setting restrictions on individual items.

After determining the goals of product distribution, it is necessary to develop elements of the product distribution system. First of all, this involves creating a system order processing, i.e. their receipt, transfer to the warehouse, selection of goods, issuance of invoices and transport documents. Processing systems in most large companies are fully automated.

Rice. 8.Main stages of the product distribution system

Thus, the largest American retail company “Kmart” introduced the following progressive order processing system: an employee uses a scanner on a cash register to register purchases and the corresponding sales data is sent to the computer at the company’s main office. The computer automatically issues orders for the supply of goods to stores, taking into account the progress of sales, without waiting for orders from the field, which usually arrive when store shelves become empty. Orders are transferred to Kmart warehouses, where batches are formed and sent to the store.

A schematic diagram of such an order processing system is shown in Fig. 9.

Rice. 9. Automated order processing system

Cargo handling- this is the determination of the location of the goods in the warehouse, its delivery to the picking point, where the goods are sorted and stacked for shipment, the movement of the goods to the loading dock and loading into the vehicle. The sequence of stages of cargo processing is presented in Fig. 10.

Rice. 10. Sequence of stages of cargo handling

It should be noted that the higher the level of automation and computerization of companies, the faster the process of forming the quantity and range of goods for shipment, and the use of bar coding of goods is of particular importance here.

The quantity and quality of storage facilities play an important role in an effective cargo handling system.

There are two types of warehouses: public and private. Public warehouses are leased to companies. Such warehouses are beneficial for companies producing seasonal products and goods with cyclical demand. Some public warehouses have temperature-controlled containers. In Russia, such warehouses today are the majority of warehouse bases of former large state trade associations, which, as a rule, have the necessary technical equipment and good access roads. Although the trade associations themselves practically ceased to exist during privatization, warehouse bases are “kept afloat” by paying for the rental of warehouse premises.

Private warehouses are the property of companies that need to store products on an ongoing basis. These include warehouses of manufacturers, where goods are stored before they are sent to customers, and warehouses of retail and wholesale companies with a large number of stores.

One of the characteristic trends of recent years is the construction of large distribution centers, i.e. large automated warehouses with computerized order processing and cargo movement. To effectively use warehouses and distribution centers, you need an effective inventory management system. Such a system is designed to determine the quantity of goods ordered to maintain optimal stock levels and optimal order frequency.

It is easiest to calculate these values for goods for which demand is stable throughout the year. It was more difficult to regulate orders for seasonal products (soft drinks, mosquito repellents, sunscreens, etc.). Companies prefer to produce them all year round in order to evenly write off fixed costs and ensure a stable workload for production personnel. As a result, during the off-season, significant stocks of finished products accumulate in warehouses.

Therefore, when producing such goods year-round, it is necessary to compare the lower production costs during the off-season with the higher costs of holding inventory. In addition, during periods of decreased demand for these goods, sales promotion tools should also be used more widely: discounts, sales, etc. The greatest difficulty in determining the optimal order size and its frequency is for goods of “disorderly” demand, associated primarily with directions fashion. The problem must be solved, firstly, by constantly carefully monitoring the state of the consumer market for these goods, and secondly, by minimizing warehouse inventories based on just-in-time deliveries. In Fig. Figure 11 shows three types of costs required to maintain the order size at the proper level.

Rice. 11. Basic costs of storing goods

Current costs are the costs of tying up capital in inventory, as well as a number of additional costs such as taxes, inventory insurance, etc. These costs can be very significant and amount to up to 25% of the cost of the inventory itself. The longer a product is in stock, the higher the operating costs.

The cost of running out of stock is the amount of lost sales due to the unavailability of goods. The higher the demand for the product, the greater the amount of such losses. Replenishment costs are the costs associated with receiving new shipments, including transportation, clearance, etc. The optimal inventory size depends on all of these cost elements. As inventory levels increase, out-of-stock losses are reduced because there is a greater likelihood that the product will be in stock. Replenishment costs are also reduced because orders are placed less frequently, but operating costs increase.

The task of determining the optimal stock size is to minimize all of the above costs. On the graph this size is represented by a dot Q.

Another important parameter is the frequency of order submission. It depends on the optimal order size and demand level, and is defined as:

where n is the frequency of order submission
D – demand level
Q – optimal order size

If demand is uniform, this will mean submitting orders on schedule at certain periods of time. In case of occasional seasonal or erratic demand, most orders will be during the peak demand period and the market needs to be closely monitored.

An alternative to maintaining a high level of inventory is a “just in time” delivery system, which allows minimizing the level of inventory, and therefore the costs of goods distribution. Just-in-time delivery means releasing products precisely in accordance with market demand and at the moment when they need to be delivered to the buyer. Just-in-time deliveries are most feasible when demand is uniform and predictable.

The JIT system was developed by Japanese specialists as a method of regulating production rather than distribution. The idea was to ensure that materials entered the production line precisely at the moment they were needed. in order to save costs for storing materials during the production process. This concept was extended to the distribution system in the early 1980s when high interest rates caused significant increases in operating costs. The best way to reduce them is to reduce inventories, which was ensured by the “just in time” system by releasing finished products at the moment when customers needed them. The “just in time” system assumes the presence of 4 conditions:

1) quick feedback from customers regarding their needs;

2) availability of an effective computer system;

3) fast and efficient transportation;

4) the presence of fulfillment centers, i.e., transshipment points where products arrive from various places for the purpose of order fulfillment (but not storage).

The last operation of goods distribution - transportation - accounts for an average of 40-45% of all costs of goods distribution. In a just-in-time system, this share is even higher, since product inventories and storage costs are minimized. In this regard, the choice of vehicle is one of the most important tasks in the product distribution management system. The classification of the main types of transport, their advantages and disadvantages are presented in Table 3.

One of the important achievements in goods distribution has been the use of intermodal transport, when transport is combined by various modes of transport. During container transportation, containers are reloaded from vehicles onto railway platforms; “train-ship” transportation involves a combination of rail and water transport. A necessary condition for multimodal transport is containerization, i.e. transportation of goods in special containers that can be transshipped from one mode of transport to another. A characteristic feature of the economies of developed countries today is a shift in the field of transportation from specialized transport companies engaged in transportation on one type of transport to universal ones that carry out the entire journey of delivering cargo from buyer to seller, no matter how many modes of transport are required for this.

Table 3 Characteristics of various modes of transport

Kind of transport	Advantages	Flaws
1	2	3
1. Automotive	Speed, timeliness, variety of routes, frequent shipments	High cost, small batch sizes, dependent on weather conditions
2. Railway	Variety of routes, large shipments, variety of goods transported	Slow, limited flexibility, limited shipping frequency
3. Air	Speed, frequent shipments, reducing the risk of goods damage	High cost, limited routes, dependence on weather conditions
4. Water	Low cost, large quantities, variety of goods	Slowness, limited routes and frequencies
5. Pipeline	Low cost,......timely delivery, frequent shipments	Limited product variety and limited routes

The final stage of the product distribution system is to assess the effectiveness of operations. Control involves comparing results with intended goals. Indicators of the effectiveness of the product distribution system can be:

1) processing time for one order (min., hour., day);

2) time to complete one order (min., hour., day);

3) time the product is in stock (hours, days, months);

4) distribution costs as a percentage of sales (%);

5) the proportion of goods damaged during transportation;

6) the proportion of cases of untimely delivery of goods.

Failure to achieve goals taking into account the above criteria may indicate the presence of problems in the product distribution system, which requires analysis of each type of operation in the system.

Companies tend to place more emphasis on certain types of operations depending on the strategy they choose. For example, having a just-in-time system requires more control over transportation operations rather than inventory control. Therefore, managers monitor the timely delivery of goods more carefully than they monitor inventory turnover. Conversely, a company with large inventories will pay more attention to the costs of holding inventory.