While product flow is relatively straightforward, the flow of information is more complex. Product procurement sends orders to vendors. A materials requirement planning process sets the stage for product scheduling. Forecasting identifies what the company will manufacture. Customer orders flow through the business, triggering new orders for raw materials, updated product scheduling and new forecasts.
Cash flow is also two-way.
Today, however, activities such as value-added services are recognized as generating revenue and acting as a powerful customer retention tool. In addition, companies are realizing that logistics activities that add value also affect the revenue flow, such as when customers release payments faster and or charge the company back because of delayed trucks or damaged product. Each level of distribution activities require different degrees of control. A company can use direct distribution, ship direct from manufacturing to the customer, or, using primary distribution, it can move the product from manufacturing into the marketplace through a series of warehouses or Distribution Centers. In many cases, companies go through a secondary distribution point, using distributors.