Posted in Operations and Supply Chain Terms, Total Reads: 348
Definition: Push Distribution
It is an inventory management tactic which is used to replenish goods based on forecasts made irrespective of current inventory levels or sales or consumption, based on the earlier contractual agreement made between the manufacturer and the distributor.
Manufacturers usually use push distribution for trade marketing and increasing stock levels and shelf space at the retailer end. It comes from the idea that companies want to “push” their products to the consumers at the point of sale. Common sales tactics of push distribution include trying to sell merchandise by negotiating with retailers to sell their products for them, or set up point-of-sale displays. Often, these retailers will receive special sales incentives in exchange for this increased visibility.
Advantages of the Push Distribution
• Useful for manufacturers in seeking distributor’s support for product promotion.
• Useful for those low value items as a distribution which is likely to place bulk items.
• Creates product exposure in potentially large retail environments.
Disadvantages of the Push Distribution
• The distributor may source alternative products (cheaper, faster delivery) once the product has met the market need.
• Distributors may demand financial contribution towards promotion.
• Distributors may demand lower prices to fit in with their promotional campaign.