Distribution of Performance Measurement

As the physical distribution of products that deliver the product to the retailer's owner so he could reach by the end consumers must have a certain standard of service. Standard functions of this service is nothing but a measure of the success of the distribution process. This is certainly a measure of success will reflect whether the Product Owner / Principal and the Customer in this case retailers are satisfied and willing to continue cooperating.

In the Distribution business, there are three groups of measurements to see the success of the distributor:

1. Sales and Coverage
2. Distribution Service
3. Working Capital Management

Sales and Coverage
This aspect is usually the most ogled directly by the Business Executor. The performance benefits are seen by the Principal and the Distributor itself. The parameters used are:

1.  A / T Sales: Actual percentage of sales against targets agreed.
2.  Growth: The growth of the business compared to the previous period.
3.  Coverage: The number of customers who make purchases in a period. Bigger number means more widespread coverage and distributor of products they distribute are also quite a lot is absorbed by the final consumer.

Distribution Service
Service distribution more to the measurement of logistics or supply chain functions. This aspect provides a direct benefit to the customer. Measurements are often used include:

   1. Order fulfillment Rate: The ratio of orders from customers who can be served to the total orders that come to the distributor. For example, the entire customer demand for products that are distributed worth 100 million yen, while demand can be met only 95 million yen. This means that the distributor fulfillment of customer demand is only 95% in the same period. Comparators that are used can be:

1. Value of transaction
2. Unit volume of transactions
3. Types of products

   2. Perfect Order fulfillment Rate: same definition as above except that the provisions of that order can be fulfilled with perfect, for example; document complete, timely, and appropriate products.
   3. Delivery Timeliness: It is the accuracy of the distributor to meet customer demand for the promised time frame. For example, the distributor will be promised delivery of a maximum of 1 × 24 hours of orders being made. Then the performance of the delivery is done by counting the number of orders in accordance with the promises of the total delivery made. In one month there were 100 such as shipping times, while the right time / or that can be sent in 1 × 24 h only 90 deliveries, Delivery Timeliness means the performance of distributors only 90%.

Working Capital Management
This aspect is generally only used by internal distributor itself, because the distributor to take responsibility as agreed with the principal and the customer. However, in order to produce a more optimal gains needed proper management of working capital.

In the technical term Supply Chain Cash-to-Cash Cycle Time, the time when payment is made the responsibility of the principal distributor to receive cash from customers. Illustration like this:

• When a distributor buying products from the Principal, usually has a term of payment. For example, 30 days. This means that distributors have the time to 30 days to make the sale before making payment to the Principal. In other words the product for 30 days is still  by the Principal. This is known as DOAP (Days of Accounts Payable).

• Meanwhile, the Distributor to its customers also have a payment term. For example, 15 days. This means that the customer has a credit for 15 days from payment receipt. This is known as DOAR (Days of Accounts Receivable).
• Items must be accepted at the warehouse can not be directly sold immediately, it takes a certain time. For example, do the purchase of 100 units, how long it takes until all 100 units are sold out. If within 20 days of the entire unit is sold, it is known the term DOI (Days of Inventory) for 20 days.
• Thus the capital provided by the principal distributor for 30 days, then reduced the inventory to be stored for 20 days and also the existing inventory at customers who just paid 15 days later. So that the total working capital needed distributors equal to 30 days - 20 days - 15 days, which is -5 days.
• 5-day when converted into dollars, it is easy to stay multiplied by average daily sales. If sales per day worth of 5 million yen, then the required working capital is 25 million. That is if the sales per day for 5 million yen a month while there are 30 days, then the sale of 150 million yen a month includes a profit margin. So do not imagine working capital required is also about 150 million minus a profit margin. But the calculation was meant to be able to generate sales of 150 million yen is actually quite capitalize 25 million Rupiah.

Internal performance measurement to the actual distribution is still quite a lot, such as the amount of damages, the amount of stock products that are not moving or is not sold within a period of time, forecast error, and so forth. However, all measurements are in fact derived from basic measurements described above.