Influencing Factors Of Distribution Efficiency And The Improving Strategies:

Introduction

1.1. Background of the Study

Production is the creation of goods and services and these goods and services can be produced in factories or industries and stored in warehouses. However, production cannot to be said to be complete until the products/services get to end user or consumer. This can be obtained through the distribution process and that completes the production cycle. One of the components of marketing mix is the task of transferring product from production place to purchase place for the customer, thus the main task of distribution management is placing goods in the hands of potential customers at the right time and place (Roosta et al. 2009). Distribution channels can be described by the number of channels involves. A layer of intermediaries that perform some work in bringing the product and its ownership closer to buyer is channel level (Kotler, 2004).

Any organization to be effective there should be effective distribution management process to convey finished products from the manufacturer to the final consumers. This is because without having standardized distributor the best product will not be delivered and the marketing mix will break down and fail (Ferguson 2000).

In the theory of marketing mix, place (distribution) determines where the product will be sold and how it will get there (Kotler, 2000). Griffith and Ryan (1996) hold that distribution channels evolved through the utilization of national resources contained within an area of trade. The need to move the resources to other areas where they were in demand brought about the need for distribution channels. A channel of distribution comprises a set of institutions which perform all of the activities utilized to move a product and its title from production to consumption.

Consumers today are more environmentally conscious than ever. However, it has been found that there is a gap between the consumer’s intention and actual purchase when it comes to products that there is a social pressure to buy for environmental reasons. The potential for the socially desirable segment is estimated to have potential, but growth seems to be slow.

1.2. Statement of the Problem

The activities . in a company with great diversity of customers spread over vast geographical areas thus must integrate the systems components of distribution to achieve an acceptable customer service level and avoid reduction of market share (Bowersox, 2008). This therefore explains the problem of getting the right quantity of the right product to the right place at the right time and at the least cost possible. This challenge has confronted companies with issues such as meeting delivery due dates and operating an efficient distribution network. Geographically imposed gaps between firms and their potential consumers is bridged by distribution, as physical distribution uses its transportation function to provide time and space utility between these two parties (Bowersox & Closs, 2010). Based on the survey conducted by various departments within the firm conducted during 2017–2018 half fiscal year market survey result; it was seen some indicators that Insufficient supply of product to the channel members during pick season by the company, unavailability of product as per end-user request, inconsistent selling capacity of channel members, inconsistent assessment of channel members by the company distributor representatives, and inadequate finical capacity of distributors for re- stocking items or products was a straggle (CCBA Knowledge and intimacy, route to market survey June, 2018). In the same report distribution is becoming a more imperative issue in company accounts as the cost of transportation, warehousing and stockholding are growing relative to the costs of other industrial inputs. Marketing efforts, such as the extension of product lines and penetration of new marketing channels into new markets, were imposing increasing strain on distribution systems, making them more complex to manage and more expensive to operate (McKinnon, 2009). In the emergence of these marginal problems, there is the fact that there are so many brands of consumer goods in the market from which the consumer has to choose from with little or no attention to difference among them in terms of quality and other characteristics.

As Yang (2013) pointed out a good design of a distribution network could achieve a number of logistics and supply chain goals, ranging from low operational cost to high customer service level. Thus, to plan, design and select and use the most efficient and effective channel of distribution in which to place a product into the hands of the customer is very important for such market leading manufacturers like as Unilever producer, Unilever Ghana.
Keeping in view the above discussion, the researcher focus to conduct a research study in which the most important factors that can affect distribution performance. will be identified and analyzed. As per the data fetched from 2017–2018 half fiscal year distribution to end user become decreasing as per the previous years, that’s is the main gap the researcher would like to address why distribution network declining? Moreover, the gap identified during the literature review by the study is that limited researches have been done to evaluate factors that affecting distribution performance. Therefore, the researcher is motivated to undertake this research and fill the gap.

1.3. Research Questions

What magnitude of competence and experience channel members have in the area of distribution system distributing/selling Unilever products to their customers’/end user and their influence on the company sales performance in product distribution?

What degree of financial and facility capacity channel members align with company target to fulfill end-user needs in terms of Unilever products?

What extent channel members selling capacity performances affect company’s sales performance of the company?

What magnitude of channel members’ availability and delivery of product affect customer satisfaction of getting product and as per the target of company product distribution system?

1.4. Objectives of the Study

1.4.1 General Objective

The main objective of this study is to critically examine factors affecting distribution efficiency and the improving strategies taking the case of Unilever Ghana on selected cities in Accra.

1.4.2 Specific Objective

The specific objectives of the study include the following:

To examine channel members’ competence and experience in the area of distribution system distributing/selling Unilever products to their customers’/end user and their impact on the company sales performance in product distribution

To evaluate how financial and facility capacity of channel members align with company target to fulfil end-user needs in terms of Unilever products

To examine channel members selling capacity performances affecting company’s sales performance of the company

To assess channel members’ availability and delivery of product as per customers getting of the product and the company product distribution system

1.5. Research Hypothesis

Based on the research question and the background of the study earlier mentioned, the study developed the following hypothesis for later testing:

H1: Competence and Experience of channel members has an influence in the area of distribution system distributing/selling Unilever products to their customers and on the company sales performance in product distribution

H2: Financial and Facility capacity of channel members has an influence on customers’ needs in terms of Unilever products

H3: Channel members selling capacity performances has an influence on company’s sales performance of the company

H4: Channel members’ availability and delivery of product has an influence on level of customer satisfaction and as per the company product distribution system

1.6. Significance of the Study

The study assumes significance in terms of its contribution to investigate the most crucial factors Affecting distribution performance. The study also helps to identify the effectiveness and efficiency of the distribution network system and to know the hindering factors and to improve the product distribution processes.

The finding of this research work are significant in several aspects. First, the results of this study have some practical value on distribution performance. in companies like as Unilever Company. The findings of this study will benefit the company in terms of understanding performance of its products distribution channels, in understanding how far the demand of customers fulfilled by the distributors, in comprehending existing gaps and factors that are affecting the performance of distributors and distribution system and how to improve the existing problems.

The researcher has a hope that the findings of this study benefit the company in understanding the current performance of its distribution channels, in comprehending whether customers that the distributors serving are satisfied in the distribution process and to improve gaps that might identified in this study.

Secondly this study will benefit researchers by highlighting current trends on distribution performance practices. Thirdly, the study will help by providing background material for future research in similar or in other sectors or industries, and anyone can or will use the findings for reference purposes in future related studies.

1.7. Scope and Limitations of the Study

1.7.1 Scope of the Study

The study has focused on factors affecting effective distribution performance. or Unilever products at the firm beverage Africa, which has 3 plants located in Dire Dewa, Bahir Dar and Accra, the researcher has focused only in the Accra branch plant official Unilever distributors, sales representative and there sales managers which are currently working on the company product distribution system which include making the product available, delivering customer service, giving advice and technical support, Even though stated distribution performance is determined by different factors, this study is confirmed on the factors affecting distribution performance of Unilever products.

1.7.2 Limitation of the Study

The scarcity of sufficient books and literature in the area of study was the major short coming that the researcher encountered during the execution of the study. The research was conducted also in all channel members found in Accra region and from distributors, customers, company sales representatives only. However, in distribution channels’, including but not limited to this only. It is very important to note that these limitations have been significant interference with the outcome of the study.

1.8. Definition of Key terms

1.8.1. Distribution

Distribution is the process of making a product or service available for use or consumption by a consumer or business user, using direct means, or using indirect means with intermediaries. Or are the movement of goods and services from the source through a distribution channel, right up to the final customer, consumer or user, and the movement of payment in the opposite direction, right up to the original producer or supplier. An order or pattern formed by the tendency of a sufficiently large number of observations to group themselves around a central value (Wren, 2007). The familiar bell-shaped curve is an example of nominal distribution in which the largest numbers of observations are distributed in the center, with progressively fewer observations falling evenly on the either side of the center (average) line. See also frequency distribution, nominal distribution, and standard distribution (Wren, 2007).

1.8.2. Channel

The channel function concept has already been extensively discussed by academics (Rangan et al., 1992). McCammon and Little (1975) argued that functions are considered to be the basic determinants of channel structure. That is, a system designed to carry out necessary tasks. Some researchers have discussed channel structure in terms of the function performed by channel members (Mallen, 1973). The basic idea was that channel functions could be allocated in different combination among various channel actors depending on the characteristics of the channel (Wren, 2007). Channel functions are categories of activities and services that add value to physical goods as they move from manufacturers to customers (Atwong and Rosenbloom. 1995).

1.8.3. Distribution Channel

Coughlan et al., (2006) defined a distribution channel as a set of independent organizations involved in the process of making a product or service available for use or consumption. The ultimate goal of a distribution channel is to bridge the gap between producers and consumers by adding value to products or services (Kim and Frazier, 1996). Typically, manufacturers, intermediaries (wholesaler, retailer, specialized) and end users are perceived as the key actors of distribution channel (Coughlan et al., 2006). Based on these definitions, it is not easy to determine where the distribution channel actually starts, since there might be multiple producers involved in manufacturing the final products at different levels. Some of these producers are close to the end at which raw material is supplied, while others are closer to the end that deals with final buyers or users.

1.8.4. Indirect Distribution Channel

The indirect channel is used by companies who do not sell their goods directly to consumers. Suppliers and manufacturers typically use indirect channels because they exist early in the supply chain (Aaker, 2001). Depending on the industry and product, direct distribution channels have become more prevalent because of the Internet. Distributors, wholesalers and retailers are the primary indirect channels a company may use when selling its products in the marketplace. Companies choose the indirect channel best suited for their product to obtain the best market share; it also allows them to focus on producing their goods (Aaker, 2001).

1.8.5. Direct Distribution Channel

A direct distribution channel is where a company sells its products direct to consumers. In this structure of distribution, a producer does not have to share its profit with intermediaries and so it is a low cost channel. The producer controls the whole marketing process and as a result can protect and maintain its brand image (Dent, 2011).

1.8.6. Competence Capability

Competence is the ability for performance within a role with the usage of ‘competencies’ as defined knowledge, skills, abilities, communication, technical skills, critical thinking, emotion, values, reflection and judgment, and causing an effective and superior performance outcome. (Cross, 2010). According to Kotonen et al. (2012, 22) and Baker et al. (1997, 266) competences describe the characteristics of an employee required to perform her tasks well.

Competences can be divided into individual and collective competences. Individual level of competences consists of knowledge, skills, attitudes and behavior, whereas collective level consists of collective team, process and organizational capabilities. Langdon & Whiteside (2004, 12) say that competencies include all the same characteristics as competences; skills, knowledge and attributes, but in addition to them also the ability of performing job tasks.

The definition of Shellabear (2002, 16) is very similar, stating that competencies are the specified skills, attitudes, behavior and knowledge necessary to fulfill a task. Often the ultimate purpose on competencies is to provide extra value for external customers.

According to Sanghi (2007, 10) idefines competency as a measurable, individual capability that distinguishes superior, effective accomplishment of a designated function according to a performance definition by an organization for its people; an interactive and complex combination of integrated attitudes, skills, knowledge and ability; behaviors and strategies; traits, motives, thought patterns, self-concepts, values and social roles.

1.8.7. Experience Capability

Key driver of improved performance is increasing cumulative experience. Organizations, teams, and individuals each develop routines for solving problems. Learning then consists of the process of exploring, selecting and replicating new routines for performance improvement (Nelson and Winter 1982; Zollo and Winter 2002). Thus, with increasing experience one may get better at executing existing routines and developing new ones.

The value of experience is also called into question by the idea of competency traps or core rigidities (Levitt and March 1988; Leonard-Barton 1992). These suggest that groups may become fixed in their way of doing things and that as conditions change, the group will not respond. This implies that experience may have a decreasing, or even negative, return when change enters a model. Staw (1980) also highlights the potential negative impact of experience as he suggests that skill increases with tenure, but effort and drive decrease over time, generating an inverted Ushaped relationship to performance.

In a review of the work experience literature Quinones, and Speer (1991) found that most studies used time on the job, or tenure, to measure work experience (e.g., McDaniel, Schmidt, &Hunter, 1988). However, other studies have measured experience by (countmgmenum1 Alley, 1989). Another approach has focused on the actual content of the experiences as a critical determinant of job performance (Mumford & Stokes, 1992). Finally, some have argued that individuals can differ in “lessons” they draw from similar experiences (McCall, Lombardo, & Morrison, 1988).

1.8.8. Financial Capacity

The ability to make financial decisions is an essential life skill, impacting the ability to effectively handle one’s property and financial affairs, and potentially increasing vulnerability to financial exploitation (Acierno et al., 2010; Laumann, Leitsch, & Waite, 2008; Lichtenberg, Stickney, & Paulson, 2013; Stiegel, 2012). Marson and others then expanded financial capacity to include a broader set of skills and activities needed for independent functioning in the community. These include performance and judgment, and vary from basic skills such as identifying and counting coins/currency, higher-level skills such as managing a checkbook, and more sions (Flint, Sudore, & Widera, 2012; Marson & Hebert, 2008; Marson, Triebel, & Knight 2012). Financial capacity in this conceptualization therefore involves not only skills around financial performance, but also sound judgment that optimizes one’s own interests and ability to follow values that generally guide one’s financial choices (American Bar Association Commission on Law and Aging & American Psychological Association, 2008.)

1.8.9. Facility Capacity

A facility capacity is an accumulation of everything needed for production of goods or delivery of services. A facility is an entity that facilitates the performance of any job. It may be a machine tool, a work center, a manufacturing cell, a machine shop, a department, a warehouse, etc. (Heragu, 1997). According to Tompkins (Tompkins et al, 1984): “Facility capacity determines how an activity’s tangible fixed assets best support achieving the activity’s objectives.” He believes that the following are elements that should be considered when designing a future facility: custom designed to meet customer needs, designed to facilitate time compression, flexible to allow adjustments to meet rapid market changes, ability to accommodate fast to market new products, focused for a small range of products, designed for a flat organization, planned at the lowest possible level, linking suppliers, manufacturing and customers, managed by a few “managers” facilitating decision making, training to adapt to change.

1.9. Organization of the Paper

This work is organized into five chapters: Chapter one deals with the introduction. This takes a look at the background to the study, statement of the problem, research question, objective of the study, research hypotheses, significance of the study, scope and limitations of the study as well as the organization of the study, Chapter Two deals with reviewing existing literature that primarily deals with discussions and review of literature related to the concepts of the research. The third chapter describes the methodology adopted for the study. This includes the research design, area of study, population, sample and sampling techniques, research instrument, administration of the questionnaire, and data analysis procedure. Chapter Four comprises compilation, analysis, and discussion of data collected from the fieldwork. Chapter Five also looks at the summary of the findings, conclusions, and recommendations.