Effective Distribution Process for Small Business.

Throughput is the measure of effectiveness of your value stream. The rate at which a system accomplishes its desired goal is called throughput. Throughput is calculated as unit divided by time. When the number of units created in a time period increases, throughput becomes higher. The speed at which your business system creates one dollar of profit is called the dollar throughput of your business. For example, assume a timeframe, like a day, week, month or year and calculate the average number of dollars that your business system produces during that period. The result of it will be the dollar throughput of your business.

Throughput time is the combination of process time, inspection time, transit time, and queue time. The total time spent on manufacturing a product is called process time. The time spent on inspecting the quality and defects of a product is called inspection time. Transit time is mostly calculated for heavy or complicated products, from when they moved from one work station to another work station. Queue time is the total time that the product spends in transit, inspection and shipping.

You deliver the promised value to the customer when you actually understand and improve the process of throughput. Unit throughput can be calculated by measuring the time taken to create an additional unit for sale, starting from raw material to the final product. If your throughput is fast you will be able to produce more units in each time, leading to increased sale capacity and better fulfilment of demand. The time taken to make one happy and satisfied customer is called satisfaction throughput. Increased throughput improves the selling capacity of a business as well as customer satisfaction.

Direct Distribution

This method of distribution involves no middleman service. It works across a single channel of distribution. Product directly goes from the manufacturer to the user. A good example of this type of distribution is services like gardening, plumbing, housekeeping, etc. Farmers who sell produce on site or at farmers’ markets use a direct channel of distribution. A company that produces its own products and sells them directly to the consumer in its own retail stores is using a direct chain of distribution. Producers also frequently connect directly to consumers through company websites or assisted marketing systems such as eBay or Etsy.

There are certain limitations to this system of distribution. If you have a lot of customers at a time you might not be able to serve them singlehandedly, because of which either the customer has to wait or you may lose them. Though the seller has full control over the process, because of limited man-hours per day, this system sometimes has drawback of time and energy. You cannot serve more customers than the energy and time that you have in a day. When the demand is unmanageable and surpasses your ability to deliver, either the service gets affected, leading to customer dissatisfaction, or you have to eventually change the type of distribution.

Indirect Distribution

This is also known as intermediary distribution. Along with the seller and the buyer, this type of distribution requires more people to complete the process. There are middleman or intermediaries who carry the process forward. If the number of intermediaries increases, the price for the final product also increases. This happens because at every step, there is value addition happening to the product. Small businesses rarely use this channel, and it is more common among enterprises.

The Expectations Effect

Expectation effect can be calculated as Quality=Performance minus Expectation. Irrespective of whatever the offer price, perception of the customer for the product will improve if they get better than the performance they have experienced. Similarly, poor performance leads to bad perception. Perception of your products plays an important role in selling it, hence, providing extra value to the customers by exceeding expectation can help establish small businesses. Add some sweet surprises for the customer to exceed expectation.

People do business with who they know, like, and trust. To attract new clients in your business you must build a relationship. The brutal truth is that nobody will invest in you until they know you. I’m not saying a dinner date with your client is a must, but you do have to allow them to enter your world. Start with connecting with people on your website. Daily updates, responses, feedbacks etc. are a good way to manage and maintain contacts. We, at HyperEffects, offer a one-hour free consultation session to all business owners to help them understand ways to grow their business relationships. We also work with your specific needs to create a website that may help you connect with your desired audience at a personal level.