Logistic and Supply Chain Management - Case Study Example

DISTRIBUTIUON CHANNELS Word Count: 1493 Abstract Distribution challenges are eminent while undertaking distribution activities given the relative dynamics in the market development. Different government policies and regulations pose a considerable challenge to distributors. Strict government policies and regulations do not support the development of distribution channels since it limits its capabilities. Additionally, unfavourable labour conditions cannot support a distribution company’s productivity. Although distribution challenges are witnessed within foreign companies, potential solutions can be formulated. The aim of this paper is twofold; discussing potential challenges and outlining and presenting probable solutions to distribution challenges. Additionally, two recommendations are suggested; including relevant stakeholders during policy formulation and empowering employees. Distribution Challenges 1.0 Introduction The distribution sector is an important attribute of any economy. It offers a connection between the consumers and producers through preferred distribution channels. Distribution channel oversees that consumers have a wide variety of goods and services at their disposal. In principle, a competitive and efficient distribution channel can improve consumer welfare (Maiti, and Marjit, 2008). The distribution sector is a major contributor to any business activity. Essentially, between 27 and 30 percent of an economy’s enterprise are in the distribution sector (Verhuef and Björn, 2007). Distribution channel is important aspects of distribution capabilities. A number of factors support its effectiveness since it is the building block of distribution companies. Various challenges have affected the sector which potentially affects its productivity. Inadequacy in IT compatibility, management cost of the distribution channels, labour conditions and regulations in product and service are present significant challenges for distribution channels. Two challenges are however discussed in the following sections. 2.0 Challenges 2.1 Regulations in Product in Different Markets Compliance is viewed as a significant operational challenge for distributors and investment managers. Different regions have different regulations (Plank, Staritz and Lukas, 2010). As such it presents multiple reporting templates which offer limited overlap. Whatever the case, the distribution sector is widely affected by numerous regulations. Most of such regulations are linked to urban planning, and environmental issues, health and safety, whereas others are mainly based on the economic basis. Although they tend to protect market interest, such regulations may be restrictive hence increasing costs of products and services and ultimately prices. In some cases however they may reduce consumer choice. Inefficiencies emanating from the poorly created government regulations can augment the cost both directly and indirectly (Armonstrong & Kotler, 2008). Direct cost incurred from regulations cost, notably when the costs are high may discourage distributors from undertaking business. Reduced competition is eminent for new companies to enter new markets, or for existing companies on price with respect to quality and price. Many of these regulations have considerable impacts on distribution behaviours. In Spain, for instance, the entry of retail outlets is constrained by zoning laws experienced at local levels. Legislation on large stores, in Belgium, has significantly reduced the structural changes in its distribution sector (Armonstrong & Kotler, 2008). 2.2 Labour Conditions for Different Market Different labour conditions are problematic when distributors seek to explore new markets. Evidently, different countries are characterised by different labour conditions. Countries with a lower GDP have attractive labour conditions that favour the development of the distribution channels. Favourable labour conditions imply that distribution firms can sustain the firm’s development in various operations (Verhuef and Björn, 2007). Higher GDP would imply that higher cost will be needed to acquire such labour force, hence reducing a company’s profit margin. Disparity in labour conditions potentially affects the firm’s propensity to invest in specific markets. The makes certain countries as preferred investment market in developing distribution channels as opposed to others. Determining the labour levels with respect to staffing is important in distribution channels. Evidently, availability of skilled labour is an instrumental aspect when it comes to offering quality service/products. A highly skilled workforce can dispense its functions efficiently and effectively (Arif et al., 2009; Ruggie, 2010; Augstein, 2010). Some markets have relatively low-skilled labour; hence it becomes problematic to acquire full-time workforce. The distributors may be compelled to outsource such skills, increasing the cost of labour. In the event that the cost of outsourcing such skills outweighs the beneficial cost, the firms could be compelled to shift to new markets that have available skill set. A high employment rate would consequently imply a favourable market condition or any company. This is supported by the relative propensity for available labour force that could function at various point of the supply chain. 3.0 Effect on Australia 3.1 Policy Regulations Regulatory policies that limit the freedom of distributors could reduce the accessibility of goods and service within the region. This can be attributed to the relative inexpensive nature of investing in such activities (Huarte and Wang, 2011). Investors shy away from working on specific goods that have a higher restrictive capacity. The food and medicine industry are subjected to highly restrictive laws. Given that human health is delicate, it is important to increase regulation on such products. Nevertheless, this would mean higher conformance to standards where many distributors and retailers cannot meet. Hence, it would either result to increased pricing and subsequent inaccessibility of some products within the market. For example a negative effect of regulations in Australia is that it increases the cost of setting up new businesses, notably from foreign countries. Inappropriate regulations directly reduce efficiency of distribution systems which leads to reduced productive growth. 3.2 Labour Conditions Presently, the Australian labour market condition remains moderate, in which, peripheral regions have a higher employment specialisation, as opposed to metropolitan centers. Evidently, higher employment levels are linked to better market outcomes (Hicks et al., 2014; Duxbury and Chris, 2001). Favorable labor conditions support the attraction of different labor force in specific industries. Given the Australian figures it is evident that the labor laws support preferred working conditions for employees. This implies that the workers can function to improve a company’s distributive capacity. Efficiency in service delivery is supported by an effective workforce whose functions significantly integrate a multifaceted approach in management. As such, some services necessities full-time functions, notably 24 hours service delivery. Evidently, different groups of employees will be designated in handling specific functions within the supply chain. Effective services are quantified by quality and time (Arif et al., 2009). Saving time within changeovers is an important aspect of supply chain management. The supply chain is affected or becomes ineffective in the case when service delivery from one group fails to undertake the duties and functions at designated or planned time. A disrupted supply chain implies that some players within the supply chain will not undertake their roles in performing the functions. Thus, an effective service delivery will not be realized. 4.0 Recommendation Involvement of various Stakeholders in policy creation Policy creation is an important aspect that dictates business process in various functions. It is of significant importance that creating preferred regulations are paralleled towards supporting the success of businesses in distribution channels (Kalubanga et al., 2012). In this regard, the government should leverage market research and cross-channel information from all distribution channels to better improve policy formulation. Extensive research should be undertaken before the formulation of policies. This research will offer an important framework that will guide the policy makers in making informed policies. Such research will consolidate data of challenges business face with previous policies and their subsequent limitation. Additionally, relevant stakeholders, notably the representative of various businesses should be included in policy making. The inclusion of relevant stakeholders implies that effective policies that support the development of different business practices are enacted. As such, effective policies can thus be protected, not only in promoting safe business practice conformance but also, help businesses exploit potential growth. Employee Empowerment Distribution companies should invest in better management practices that plan the operations in such a manner that identifies potential loop holes; with regards to human capital. This can be supported by developing organizational policies that support the development of employees. In order to address the uncertainly of the different labor conditions it is important to empower the workforce. Empowering the employees implies that they can improve their approach to business. An empowered workforce suggests that productivity will be significantly improved hence, improve the organizational functions. This will further its management capabilities to better manage employees, given the tasks of operations. 5.0 Conclusion It is evident therefore that a number of challenges affect the development of distribution channels. Labor condition and regulations in different markets pose a significant challenge to success of operational capabilities. Strict regulations choke distribution capabilities in different markets. Arguably, strict regulations so not offer attractive investment platforms that support the very basis of companies – generating profits. Labor conditions, on the other hand, influence a company’s effectiveness in supporting productivity and overall attractiveness of a market. As such, the success of any distribution channel is defined by sound environment that supports all activities conducted by a firm. As such, the government plays a mediating role in ensuring that such environments are created for distribution channels; through effective policy creation. Reference List Arif K., Bakkappa B., Bhimaraya. A.andSahay, B. S. 2009, Impact of agile supply chains.’ Delivery practices on firms’ performance: cluster analysis and validation. Supply and chain management: An International Journal, 14( 1): 41-48. Armonstrong, G., &Kotler, P. 2008, Principles of marketing.12th ed.). Augstein, D. 2010, Study on the Legal Framework on Human Rights and the Environment Application to European Enterprises Operation Outside the European Union. Edinburgh Duxbury, L., and Chris H. 2001, Work-Life Balance in the New Millennium: Where Are We? Where Do We Need to Go? Canadian Policy Research Networks, Ottawa. Hicks, J., Sherley, P. 2014, The Impact of Employment Specialisation on Regional Labour Market Outcomes in Australia.Australian Bulletin of Labour 40(1): 68-90. Huarte M., and Wang, Y. 2011, The 2011 Update of the OECD Guidelines for Multinational Enterprises: Balanced Outcome or an Opportunity Missed? Halle / Saale. Kalubanga, M., Tumwebaze, S., and Kakwezi, P. 2012, Examining the effect of multi-channel product distribution on firms’ performance International Journal of Economics and Management Sciences, 1(12): 90-103 Live Briefs Canada 2014, Economics: Australia Labour Market Conditions Remain Moderate. 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