1.1 Preparation of Distribution Plan

Preparing a distribution plan is the first step in getting stored goods to customers efficiently. Before planning, the stores and logistics officer must understand the basic terms used in distribution, because they describe who the goods are for, how much may be spent, and through which routes and intermediaries the goods will move. This topic defines those terms; later topics in this chapter develop each one in detail.

Example: the stores department of a national cereals depot in Moi's Bridge prepares a monthly distribution plan for releasing maize to millers and relief agencies in the North Rift.

1.1.1 Definition of Terms

The key terms used in preparing a distribution plan are distribution, customer, budget, customer segmentation, distribution plan and distribution channel. Each is defined in its own section below, and each term recurs throughout the unit when goods are planned, documented, transported and tracked.

1.1.2 Distribution

Distribution is the process of making stored goods available to customers or users at the right place, at the right time, in the right quantity and condition, and at an acceptable cost. It covers order processing, storage, picking, packing, transport and delivery, as well as the transfer of ownership through channels such as wholesalers and retailers.

1.1.3 Customer

A customer is any person, organisation or internal department that receives goods from the store, whether by purchase or by internal issue. External customers buy the organisation's goods; internal customers are departments, sections or branches of the same organisation supplied by its store. Customers are the reason for distribution, and their requirements determine what is delivered, where and when. The kinds of customers are covered in 1.2.

1.1.4 Budget

A budget is a financial plan, expressed in money terms, that sets the amount an organisation expects to spend on an activity over a given period. A distribution budget estimates costs such as transport, fuel, vehicle maintenance, storage, handling, packaging, insurance and staff, and is used to control spending and judge the efficiency of distribution.

1.1.5 Customer Segmentation

Customer segmentation is the division of customers into groups (segments) that share similar characteristics, needs or ordering patterns, so that each group can be served in the most suitable and economical way. Its types, reasons, importance and process are covered in 1.3.

1.1.6 Distribution Plan

A distribution plan is a written document that sets out how goods will move from the store to customers over a given period. It states which goods go to which customers, in what quantities, through which channels and routes, by which transport, on what schedule, by whom and at what cost. Its importance, contents and the process of developing it are covered in 1.4, 1.5 and 1.6.

1.1.7 Distribution Channel

A distribution channel is the route or chain of organisations and individuals through which goods pass from the producer or store to the final customer. A channel may be direct, with no intermediaries, or indirect, passing through agents, wholesalers, distributors or retailers. The types of channels are covered in 1.7.