1.

Decreased Economies of Scale

If you physically deliver your product to different wholesalers, retailers or
distributors, your shipping and service costs might rise. Concentrating your sales
in one marketing channel lets you decrease your staff time working with different
partners, decreases the use of resources such as trucks, fuel, drivers and
warehouse staff to deliver product, and reduces the amount of on-site promotional
materials you need. In addition to sales fulfillment and support, youll need to add
tracking and assessment work for each channel you use.
2. Increased Sales Costs
If you sell through one marketing channel, such as a wholesaler, your only cost of
distribution is to service that wholesaler. If you add online sales, you will need to
hire a fulfillment company or hire staff to take and fill orders, buy software to take
and process orders and pay to promote your online sales capabilities. Working
with different partners might require different advertising or promotional efforts,
based on the partners specific needs.
3. Lack of Control
The more people who sell for you, the less you control your brand message.
Wholesalers and retailers will be more concerned with their commissions and
profits than helping you manage your brand. You might emphasize quality, service
and use consultative selling to create long-term partnerships, while a wholesaler,
reseller or sales rep might focus on discounts, promotions, sales and other
gimmicks that can damage your brand. If youve decided not to sell your product
next to a competitors, your distributors might not honor this strategy.

4. Loss of Focus
The more different types of marketing channels your small business uses to get
the word out, the less focused each of your individual marketing campaigns may
become. Small businesses in particular tend to have a harder time creating,
distributing and monitoring more than one marketing campaign distributed
through more than one marketing channel at a time. This is in part due to the lack

of a dedicated marketing department in most cases, and the need to maintain

relationships with a diverse array of marketing partners. A laser-like focus on the
performance and return on investment of each campaign is a necessary part of
successful marketing and the use of multiple channels may not allow for that
focus.
5. Mixed Messages
It is often difficult for businesses who engage in campaigns that utilize multiple
marketing channels to maintain a constant and consistent marketing message
throughout. When you have more than one advertising campaign running at any
one time, the messages being sent may intentionally not be the same for different
segments of the market. Consistency is the key to establishing brand and product
recognition and prestige, and to developing loyalty among the consumer base.
When the messages you are producing are confused or inconsistent, the result may
be a lack of trust and a generally negative response to your advertising.
DISADVANTAGES:
HIGHER COSTS:
Empty Backhaul
Lack of Management Talent
Added Overhead & Burden
Capital Requirements
Liability for Cargo Damage & Theft
Liability for Accidents
Increased Paperwork and Administrative Costs
Labor Unions
The first and most prominent is that distribution centers require a different process
management approach then warehousing, so people must adapt. As materials are
relatively easy to manage when kept as on-hand inventory, a distribution center
creates a whole new set of complexities because material is no longer controlled
in the same way. Material is simply flowing through the distribution center, and as
orders now go directly to the manufacturer, not the distribution center, at times
this system will seem difficult to control. Based on the product type and demand
levels, maintaining control of the system could be very important to a company.
6. At the same time, stock accuracy can be difficult to manage with a distribution
center because limited or no stock is kept on hand. With a distribution center,
again lead times become critically important to maintain adequate inventory and
more importantly manage material process flows throughout the downstream

supply chain to ensure products can be made-to-order. This means coordinating

lead times between contributors to ensure demand is satisfied or inventory is
prepared at intermediate locations. When a company is used to managing
inventory, this change in process can create potential stock inaccuracies
throughout the supply chain as a make-to-order systems requires different
stocking levels than a make-tostock model.
7. Managing transportation systems is another potential disadvantage for a
distribution network. With strong 3PL providers who are in part dedicated to the
distribution center, less risks can occur. By working closely together, routing and
scheduling can be managed more effectively. In general however, the coordination
needed to manage transportation in a new system is very different from the
standard warehousing model. Transportation companies must have knowledge
well in advance of pick-up times, which are dependent on customer orders and
manufacturing and transportation lead time. On the other end, delivery times are
important to ensure high service levels. In this distribution system, scheduling and
planning are far more essential to create a smooth material flow process.
8. Lastly, we must consider the capital investment for a distribution center. First we
must look at the structural investment, but also the internal operating systems
managing material flows. Inside a distribution center there are commonly a
number of material processes occurring such as sorting, picking, order assembly
and shipment documentation processing. Each of these systems comes with an
added cost, and depending on how advanced then distribution center is, the costs
can be very high. This factor should certainly be weighed against the added value
of the advantages listed above. Importantly this will differ for each company and
supply chain.

9. Most inventory control software program apps cost extremely high, and price is
definitely an issue for small and medium sized businesses. The hardware costs
within the relation to bar code viewers along with elements could add on the
expense. Even so, might a onetime cost solely. When you are it, you are able to
recover this cost for the reason that system aids you in preserving funds in other
aspects.

10. Inventory control software program makes easier your organization operations, in
itself, is a pretty complex product. Grasping the basic principles is difficult and
time intensive too, of course, if you arent getting the total grip than it, maybe you
wouldnt be able to use it properly enough. There are tons of education guides
accessible to help you normally indicate. The corporation which sells the program
for you can also conduct exercise sessions with your request, but may ask for a
different price. As long as you are going to put time into this, it is possible to get
rid of this hurdle.
11. Increased master data maintenance.
12. -Additional process step for receipt and picking.
13. -Requires expert knowledge to configure for maximum benefit.
14. -More complex to resolve problems caused by incorrect processing.