How To Effectively Run A Distribution Business In Indonesia?

November 29, 2019

Distribution is one of the most important businesses in Indonesia with relevant activities of wholesale, import, export, and retail represented in the process. Distribution is defined as an essential business that makes products available for purchase by allocating it through the market. Transportation, packaging, and delivery are included in distribution steps. 

 

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I. Introduction 

 

A distributor is a company which purchases products, stores, and then sell through a distribution channel. They are individual companies working on behalf of another in being an intermediary between manufacturers and retailers. Commonly, retailers are connected with manufacturers in a collaborative relationship through distributors. Therefore, distributors are important to manufacturers in expanding market and looking for new opportunities. 

 

A distributor company, which is a customer of Abivin in Indonesia, operates in Supply chain and Finance service. This distributor has partnered up with large corporations in their distribution process. Its missions are to create values and make positive differences with the distribution activities they engage, strengthen network and coverage to ensure principals product availability. They also provide accurate, complete and on time information and reporting relates to operational, market and competition. 

 

Being a large-scale distributor like this company requires extra responsibility. This distributor has established strong connections with large manufacturers in FMCG industry as this is the industry they focus on. Owning such affiliations with large FMCG companies brings out numerous opportunities and responsibility for the distributor to ensure a large number of products should be delivered and consumed effectively. 

 

In addition to fulfilling orders that are accumulated from retailers to distribution center, they also take charge of managing and selling products on behalf of the manufacturers, keep searching for new opportunities to gain more sales.

 

II. Challenges 

 

Being such an active distributor for multinational consumer goods corporations, this company faces different challenges every day that has a negative effect on its effectiveness in delivering products. There are some specific constraints in transportation and delivery: traffic congestion, government regulation related to traffic and order fulfillment. 
 

1. Traffic congestion 

 

One of the difficulties is Indonesian traffic congestion, which has become an infamous image of this country. It is caused by the growth in number of vehicles due to rapid increase in population. As a result, the development rate has outpaced its facility development. It costs the distributor extra time and expenses in planning and commuting in heavy traffic congestion in Jakarta or any other large cities in Indonesia. 

 

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2. Government regulation 

 

To cope with this traffic situation, Indonesian government placed rules in some areas of Jakarta city. The solution of restricting car license plate on odd/even number basis is given in order to minimize traffic congestion. In some days of the week, it allows cars with odd number license plates and vice versa. Traffic congestion and weak infrastructure also make it expensive for distributors to deliver products within Indonesia. It is also a struggle for them to assign trucks to commute in different roads and with the appointed trucks’ license plate numbers. 

 

This distributor used to assign all odd or even trucks to roads that allow to commute at that day without calculating distance of orders. Despite its inefficiency, it was the most optimal method for them at that time. Since there was no digitized solution good enough to help tracking orders and planning routes.

 

3. Order fulfillment 

 

Another constraint relates to delivery and transportation is that the company has numerous orders to fill and trucks to keep track with. There are difficulties in efficiently distributing goods from distribution center to top stores, cross-docks and to retailers logically. Because there are so many of the complicated conditions needed to take into account, they had no choice but planned this process manually without the most optimized solution to save time and costs.

 

In reality, it was time-consuming for this distributor to fulfill an order even if the distributor already had inventory on hand. In wholesale distribution, the product volumes are usually large and therefore, the distributor is constantly challenged to deliver products quickly. 

 

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III. Solution 

 

This distributor decided to equip their distribution process with Abivin vRoute, an advanced software that provides them full control of truck management, optimized route planning, warehouse management. This software helps the distributor reduce logistics cost and increase efficiency by solving specific constraints of transportation and delivery that the company was facing. 

 

1. By digitizing transportation planning process, Abivin vRoute saves time in delivery and planning: The software algorithm automatically generates the most optimized delivery routes for trucks with odd or even license plates to commute in appointed days. Meanwhile, it still ensures the efficiency of assigning the right orders to hundreds of drivers. The routes will be the most optimal ones in terms of cost and time, while satisfying 20+ business constraints, such as: different types of delivery vehicles and capacity, time windows for customers/retailers, traffic condition, break time or special delivery models. These constraints are solved to optimize the routes, while historical data is analyzed to improve the solution over time. 

 

2. Reduce logistics costs: The algorithm also optimizes load capacity, so the distributor can minimize the number of delivery vehicles. Given the same distribution needs, vehicles are reduced vastly compared to manual plans. With the most optimized route and the least number of vehicles, cost will be reduced vastly. 

 

 

3. Improve customer satisfaction: Using Abivin vRoute ensure this distributor to deliver products on time and at the right time windows. This software applies electronic Proof of Delivery (ePOD) methods like Photo Check-in, OTP SMS or Electronic Signature to guarantee that the right retailers receive products at the right time, at the right place, in the right condition.

 

4. Enable real-time visibility of the whole supply chain process: Helps manager control and ensure delivery progress with digitized order fulfillment. Managers have time to fulfill other tasks without having to manually write out and process each order at every stage. Once an order is placed, warehouse personnel will receive an automated update and begin to process the orders using technology. 

 

To efficiently run a distribution business in such a challenging market as Indonesia requires deep understandings about the market, law and regulations. Distributors need to look for solutions to maintain a consistently excellent performance as well as keep manufacturers and retailers satisfied. Abivin’s powerful software system provides automated logistics optimization, transportation tracking and inventory management for all of your company’s needs. 

 

Click here and optimize your distribution process with Abivin vRoute! 

 

References 

1.https://www.primaseller.com/blog/seven-ways-run-wholesale-distribution-business/

2.https://www.indonesia-investments.com/business/business-columns/types-of-distributors-and-agents-in-indonesia/item2618

3.https://www.export.gov/article?id=Indonesia-distribution-and-Sales-Channels

4.https://www.repsly.com/blog/consumer-goods/everything-you-need-to-know-about-product-distribution

 

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