Distribution Channel: Distributors

| 5 minutes

Applicable product ranges: Pharmaceuticals, Medical Devices, Supplements, Veterinary

What are “Distributors”?

The general term “distributor” is a broad term that defines any company that distributes products, at any stage in the supply chain. Even among our supply chain, we have both distributors and sub-distributors, both are distributors but at different stages of the supply chain. However, in our company’s definition of “distributor”, this is our direct customer that is our primary target audience across all of our product ranges. The distributor is after AdvaCare but before the secondary target audience distribution channels:

API Manufacturer > Finished Manufacturer > AdvaCare > Distributor/Importer > [Sub-Distributor] > Hospital/Clinic/Pharmacy/Retail > End Consumer (patient/consumer/farmer)

The distributor is the first importer in their country, or region if they work in multiple countries. Within their country or region, they are the first in the supply chain, with the end consumer being the last. The distributor is often also the importer, but this depends on the supply chain of the country. In some countries, the importer and distributor could be separate companies, but usually this is not the case.

It is important to understand our distributors:

Buyer Personas: BD

The Buyer Personas for the BD Dept. categorize and define every buyer profile of prospects that result from lead generation.

Buyer Personas: AM

The Buyer Personas for the AM Dept. categorize and define every buyer profile of existing distributors.

Customer Types

Each Customer Type defines the selling approach, the negotiating strategy that BD and AM use to achieve their goals.

How each Department works with the Distributor

Our Marketing Department targets prospective distributors via lead generation, then our BD Department converts the leads from prospects into customers which we call “distributors”, and then lastly the AM Department takes over the account to process the orders of the distributor and further develop and grow them in terms of revenue and product range.

Basic responsibilities of each department that has communication with the Distributor include:

● Marketing Dept:
● processes leads from prospective distributors
● manages promotional materials with distributor
● BD Dept:
● engages with prospective distributors until conversion
● manages product registrations from start to finish with new distributors
● client development to start new product registrations with existing distributors
● AM Dept:
● processes RFQs and orders for existing distributors
● client development to expand range with existing distributor

Primary vs Secondary Target Audiences

There are 3 relationships amongst the stakeholders to understand:

1. Primary Target Audience: AdvaCare and the Distributor (direct)
2. Secondary Target Audience: AdvaCare and the Distributor’s customers (indirect)
3. Primary + Secondary Target Audience: The Distributor and Distributor’s customers (direct + indirect)

Understanding the dynamic, the relationship, between the stakeholders is absolutely crucial to understanding the entire supply chain and our place in it. Without understanding the above dynamic, it is impossible for our company to compete and grow.

Distributors are AdvaCare’s primary target audience - the buyers of our products that place orders and then distribute our products to the secondary target audiences. Distributors are who we work with directly, opposed to the secondary target audiences with whom we work with indirectly through our distributors. It is vital to understand our secondary target audiences so that we can better understand how to work with, support and develop our distributors, but it is the distributor who matters most of all to our business.

Challenges facing Distributors in Developing Countries

In estimated order of priority from most impactful challenge to least:

CHALLENGES OF DISTRIBUTORS
Market Competition
  • National distributors often face competition from other local and international distributors, as well as parallel importers.
  • Competing for market share, securing favorable supplier relationships, and differentiating their services in a competitive environment can be challenging.
Demand Variability
  • Demand for healthcare products can be unpredictable, with fluctuations influenced by factors such as disease outbreaks, seasonal variations, and economic conditions.
  • Managing demand variability, forecasting accurately, and optimizing inventory levels to meet customer needs can be challenging for national distributors.
Access to USD for International Payments
  • Payments are often a problem, not necessarily because of lack of funds, but rather the banks do not have USD available requiring the distributor to wait causing delay in the procurement cycle.
  • Some distributors are forced to transfer local currency out of the country, then make payment to us in USD or buy USD locally on the black market at a higher rate.
Financial Constraints
  • Limited financial resources can impact the capacity of national distributors to invest in infrastructure, technology, and human resources.
  • Insufficient funds may hinder their ability to expand distribution networks, procure larger volumes of products, or invest in systems to enhance operational efficiency.
  • Distributors often provide goods on credit with extended payment terms. This can impact distributors' cash flow and their ability to maintain sufficient stock levels and invest in logistics and distribution infrastructure.
Supply Chain Management
  • Managing a complex and diverse supply chain can be a significant challenge when other parts of the supply chain are weak and cannot be controlled.
  • National distributors need to coordinate with multiple suppliers, ensuring product availability, managing inventory, and maintaining effective logistics and distribution networks across the country.
Product Quality and Authenticity
  • Ensuring the quality and authenticity of products is crucial but challenging in developing countries.
  • National distributors must establish robust quality assurance processes, including proper storage, handling, and transportation, to safeguard against counterfeit or substandard products.
Regulatory Compliance
  • Complying with diverse and evolving regulatory requirements is a complex task for national distributors.
  • They need to navigate the complex and lengthy product registration process, licensing, import/export regulations, labeling, documentation, and quality control requirements set by regulatory authorities.
Training and Capacity Building
  • Developing a skilled workforce capable of managing complex distribution processes is crucial.
  • Regional distributors may face challenges in finding and retaining trained personnel, providing ongoing training and development opportunities, and building the necessary capacity to meet evolving market demands.
Technological Adoption
  • Embracing and integrating technology into distribution operations can be a challenge for regional distributors in developing countries.
  • Limited access to affordable technology, lack of digital infrastructure, and resistance to change can hinder the adoption of efficient distribution management systems and tools.
Infrastructure and Logistics
  • Inadequate infrastructure, including poor road networks, limited transportation options, and insufficient storage facilities, can pose significant challenges for national distributors.
  • Difficulties in accessing remote areas or poorly connected regions can hamper timely and efficient distribution of products across the country.
Health Information Systems
  • Inefficient health information systems and limited data interoperability can hamper effective communication and coordination between national distributors, suppliers, and other stakeholders.
  • Access to real-time data, demand forecasting, and supply chain visibility is crucial for efficient distribution and inventory management.
Did this article help you?
 0
 0