Getting Inventory Management Right
The basic principles of the distribution industry have been the same for years – buy inventory, stock it, and resell it. But while the principles remain the same, the distribution industry is changing. Distributors, caught between manufacturers who want them to be more efficient and retailers that want them to be more responsive, are facing significant margin pressures. Suppliers are increasingly providing retailers with direct access to products, eliminating the need for a distributor. And e-commerce entrants create a tougher competitive environment.
In these changing times, it’s more important than ever that distributors get their inventory management right. The good news is that you have access to a wide range of tools that can help you meet these challenges. Here are three things you can do to make you more efficient, productive, and agile.
Pay attention to your product mix.
Your inventory is your second largest asset – so careful inventory management is critical to your company’s success. Employing automated inventory management and control solutions will help you maintain the value of that asset. These tools can help to ensure that you’re supplying your customers with the right items at the right time and the right price. They can also give critical information about which product lines are generating the most revenue for your company.
When evaluating your product mix, pay careful attention to your non-stock items as well as your stock items. In some areas, non-stock sales can account for as much as 70% of a distributor’s sales. Understanding where your revenue is coming from is key to maximizing inventory management.
Consider how you age your inventory.
In the past, when distributors took physical inventory, it was easy to walk through a warehouse and see which product lines were moving and which were sitting. The same thing can be done today with modern inventory control technology. An integrated, cloud-based solution gives you real-time access to data that tells you what product is moving and what is not – so that you know which stock is making you money, and which is sitting there getting dusty. This ensures that you’re making the most efficient use of your inventory investment.
Talk to your suppliers.
If you have inventory that isn’t moving, consider negotiating a return with your supplier rather than dumping the inventory. This has benefits for both you and the supplier – you have the opportunity to restock with items that your customers want, and the supplier receives critical information on what products are selling in your territory. Arming yourself with timely sales data can help you with these negotiations.
If you’re a wholesale distributor, getting inventory management right is one of the most important aspects of your business. Understanding what you have in inventory, what’s happening with it, and how to cut costs and improve fulfillment will make a critical difference to your success. Want to know more about Sage 100cloud and how it can help you get inventory management right? Call MicroAccounting today at 855-876-3773.