The key value proposition of any distributor is having the right item available for sale at the right time for the right price to the right customer. Customer “churn”—turning over customers to competitors—is generated by not being able to do this on a consistent-enough basis. On the other hand, having too much inventory or the wrong inventory will the bottom line into the negative. Visibility is the key to walking this line.
Accurate, companywide inventory data drives the ability to effectively create proactive, responsive replenishment operations and minimize inventory costs. To stay competitive, distributors need to know:
Without full visibility of inventory transactions, distributors are unable to measure and improve supply-side performance.
Every distributor who has used disparate systems understands the pain poor integration creates throughout the supply-line process. Stringing together systems with export-import of spreadsheets and manual processes sacrifices efficiency and accuracy, and it can influence poor decisions.
What a truly automated system delivers is the entire supply-side cycle of requisition management and approval, purchase order management and approval, inventory tracking and control, warehouse management, and picking and shipping management, removing the need to reenter and reorganize data between systems, and reducing the risk of errors.
In February 2015, Aberdeen Group released a report that compared the success levels of today’s distributors, stating that
”Leaders are 3.3 times more likely to reduce costs by driving down excessive inventory and proactively responding to inbound and outbound customer events with technology that allows multi-party collaboration with suppliers, customers, and partners.”*
For decades, distributors have been using software to manage their inventory and improve the purchasing process. But, the key point in this study is focused on the extension of these transaction systems beyond simple execution of basic functions (sales, purchasing, etc.). The new marketplace is demanding that this modern, connected technology fulfill support collaboration and efficiency to connect the whole supply chain.
Making it easy for everyone to collaborate and share information should be a high-level goal. Distributors who make doing business easy and enjoyable for suppliers can build strong relationships, but when they collaborate they become trusted trading partners. Distributors who can bridge this collaboration and integration gap gain significant cost and service advantages.
* From the Aberdeen Group’s February 2015 report “What has Changed in Wholesale Distribution : 2015 and Beyond” by Bob Heaney, Research Director, Supply Chain, Wholesale and Retail Practices.
Crestwood Associates LLC.
(Formerly Stanley Stuart Yoffee & Hendrix, Inc.)
1060 Maitland Ctr Commons Blvd.
Maitland, FL 32751
6750 N. Andrews Ave.
Ft. Lauderdale, FL 33309