Symptoms: where distribution operations break
Most trading businesses don’t fail due to lack of sales. They fail due to poor control on stock and credit. Common symptoms include:
- Stock shown “available” but dispatch fails (mismatch/hold/returns not accounted)
- Multiple rate sheets, ad-hoc discounts and disputes on final invoice value
- Sales commits without checking stock or credit exposure
- Receivables depend on “collection calls”, not a disciplined system
- Returns/shortages/damages are adjusted informally, causing ledger confusion
Goal: Make dispatch and cash predictable by enforcing order discipline and credit gates.
The connected system: Stock → Order → Dispatch → Cash
A reliable distribution workflow has one connected chain:
- Stock accuracy: inward, transfers, adjustments, returns, holds
- Order discipline: price rules + stock reservation + credit gate
- Dispatch control: pick/pack, shortage handling, transporter tracking
- Invoicing accuracy: taxes, schemes, freight, credit notes
- Collections: follow-up cadence, payment promise tracking, receipts mapping
Stock control: accuracy is not optional
Stock accuracy is the foundation. Without it, every dashboard becomes “numbers only”. Implement these controls:
- Single stock ledger: every inward/outward impacts stock in real-time
- Holds & reservations: separate “available” vs “reserved” vs “blocked” stock
- Batch/expiry (if applicable): FIFO rules for pharma/FMCG
- Returns flow: customer returns go through inspection and proper credit note
- Cycle counts: daily/weekly small checks instead of yearly panic audits
In distribution, “stock mismatch” is not an inventory problem. It is a process discipline problem.
Credit control: build gates, not arguments
Credit issues are predictable when you add a few hard gates:
- Credit limit per party: based on business type and risk class
- Exposure calculation: outstanding + unbilled dispatch + open orders
- Overdue blocks: order confirmation blocked beyond bucket threshold
- Override approvals: manager approval with remarks + audit trail
- Payment terms enforcement: due date discipline with promise tracking
Practical rule: If credit override is easy, receivable discipline will always collapse.
Receivables: from follow-ups to a system
Collections become smooth when you run it like an operating process:
- Aging buckets: 0–7, 8–15, 16–30, 31–60, 60+
- Top overdue list: top 20 accounts that drive 80% of overdue risk
- Promise-to-pay tracking: commit date + amount + status updates
- Receipt mapping: receipts mapped to invoices (no loose adjustments)
- Dispute reason codes: rate dispute, shortage, damage, scheme, documentation
Leadership MIS for distribution: what to track daily
A distribution MIS should highlight cash and fulfillment risk early:
- Dispatch readiness: what can ship today vs what is blocked (and why)
- Credit blocks: orders blocked by exposure/overdue + owners
- Receivable risk: overdue buckets + top overdue parties
- Stock risk: shortages on fast movers, non-moving value, expiry risk
- Margin leakage: discount overrides and low-margin deals
If you want a stronger MIS framework, see: MIS Dashboards for Leadership: KPIs That Drive Accountability.
Implementation approach: stabilize first, then scale
Avoid “big bang” chaos. Use module-wise rollout:
- Phase 1: stock ledger + inward/outward + basic sales orders
- Phase 2: dispatch + invoicing + returns/credit notes
- Phase 3: credit limits + overdue blocks + approvals
- Phase 4: receivable system + promise tracking + dashboards + alerts
Checklist
- Available vs reserved vs blocked stock is clearly visible
- Orders cannot be confirmed without stock + credit validation
- Returns follow a controlled inspection + credit note flow
- Receivable aging is reviewed weekly with owners and actions
- Promise-to-pay tracking exists and is auditable
- Leadership dashboard shows exceptions + ownership, not only totals
Need distribution control on stock + credit + receivables?
Share your product range and sales/distribution flow. We will propose control points + rollout plan with estimate.