Distribution Channel

[Former Member]

Hi,

Please explain on what parameters to be considered in defining Distribution Channels in SAP for clientu2019s business.

I would request to throw some light on what basis 2nd distribution channel or more required. What are the advantages to have more number of distribution channels and disadvantages of having more distribution channels.

I am in a process of designing org structure of my clients business. To me defining distribution channels are bit confusing hence I would request you to explain what are the parameters to be considered to go for a different distribution channel.

Thanks.

[Former Member]

Hi Victor,

The distribution channels are mainly based on how the business is to be conducted by the Organisation. Typically, if the Org is in FMCG then they might have

1] Retail - taking care of all Retail sales across the country

2] Wholesale - taking care of all wholesalers across the country

3] Goverment - only taking care ofbusiness in govt organisations

and so on ...

Also this helps the Organisatin to sagregate the Business profile for that Country. It makes makes them understand which channel is giving them what amount or revenue and they can also base thier future Marketing or Sales Strategy accordingly. This comes from Reports which they can generate based on DCs.

Hope this helps you.

rgds..Ameet

[jignesh_mehta3]

Dear Victor,

In simple terms - Distribution Channel is the way or manner in which the Goods / materials reach your Customer.

E.G. In your company there are two methods of Sales:

1. Direct Sales

2. Retail Sales

Now for these types of Sales you will definitely have different Pricing, Terms & conditions, payment terms etc... Thus the need arises to create different Distribution Channel.

Also as suggested above over a period of time you will need various reports. Here if you have divided your business process in different Distribution Channel then it would be easier to generate Reports & do analysis.

But for your client try to create Distribution Channel logically, means as per exact business requirement.

Hope this helps.. .

Thanks,

Jignesh Mehta

[reazuddin_md]

Generally, It depends on Sales reporting structure in any organization & pricing factors also impacts to go for new distribution channel.

For eg:

If your company have business within country & outside the country.

then you can go for Domestic & Export as 2 distribution channels.

again, within Country,if Client has divided their sales/ customers into Government Customers, Retailers, Dealers etc.., & the treatment to these group of Customers are not alike such as Conditions & they specifically want to see the LIS in Std SAP reports. Then you can define them as distribution channels.

You can either go for Customer group also to differentiate Conditions, But when you want to take the report using std LIS, you will not have an option, because most of the LIS are dependent on Sales Organization , Distribution Channel & sometimes Division.

Now Company's reporting strucutre in sales & their different approach towards different ways of sales will take you to go for new distribution channel.

another eg:

Within Country if company sells products to EOU's. & wants to see the Overall sales for EOU's , w/o defining it as new distribution channel ,its difficult to get the LIS reports- If you include these sales also in Domestic distribution channel.

hope it adds info.

[ajitsingh6]

Dear,

Distribution Channel in SAP is The Channel through which goods sold to Customer as it may Direct sales/Whole sales/ Retail sales.It also different sales statics based on ur distribution channel.

That is why u assign one or more distribution channel to a sales organization as u may require to sale product through Whole sale as well as through Retail sales.

Regards

AJIT K SINGH

HAPPY TO HELP U

Edited by: AJIT K SINGH on Dec 8, 2009 11:26 AM

[Former Member]

Dear Victor,

Basically Distribution channels are using for the Purpose of Reports

Lets say ....you may define 2 Distribution channel 1)Direct 2)Online..

At the End of the Quater you can find In Whihc Distribution channel you get more sales..

you tell the above advantage of Distribution channel..so that client can tell his Requirments....then you can map into SAP.

Regards

raj.