Improving Inventory Management for Distributors

By Jim Lewis, CEO Enhanced Retail Solutions LLC

Distributors are marvels at moving inventory through the supply chain. They have invested heavily in systems and logic to make that happen. But they have trailed manufacturers and retailers when it comes to end consumer analytics and using that data to improve inventory productivity for those they serve. They can serve retail outlets from franchised chains to hundreds or thousands of individual mom and pop stores. Traditionally the kind of analysis we do has been a value add that distributors pass on to those shops. But lately they are coming to us for more inventory management tools to help them with more detailed reporting and analysis. There are 3 key areas of benefit- more accurate forecasting, improved assortments and trend analysis. With inventory generally the largest capital expense, even a small improvement in inventory productivity can have a significant positive impact on revenue and profitability. The combination of various data sources with more predictive analytic tools is enabling greater insights- with more actionable recommendations than ever before. For many distributors this is a huge opportunity.

For independent shop owners, determining what and how much to buy can be perplexing. In limited cash flow situations making the wrong decision can be fateful. A distributor who acts more as a partner- and provides recommendations based on trends (both localized and global) can reduce that risk. And while mom and pop stores generally have a good pulse on their end consumer’s needs, they may miss important trends that are taking place in the broader market. With the help of ERS both the individual shops and the distributor can have their own customized reporting, available 24/7 via a web portal. They also share data and reporting, strengthening their relationship and being able to partner on decision making. A distributor that provides that level of information sharing gains a competitive advantage.

ERS is helping distributors are provide their buyers with insightful dashboards with trends, on-line buying sheets pre-filled with recommendations and other tools to help them more productively flow product. Inventory health reports help to quickly visualize where inventory investments are- in fast or slow selling merchandise and help determine what to buy more of and what to markdown.

The key is data, and it varies greatly within industries and shop size. Some have POS systems that provide a good deal of sales and inventory data, while others still use a clip board with a handwritten purchase order. Combining data from shops where available and ship data from the distributor is enough to start the process. That data can be aggregated and analyzed- then shared across the base. Geography, seasonality, demographics and weather data points can all be integrated to provide even deeper insights.

As distributors become more interested in managing inventory throughout the entire supply chain, profitability will go up for everyone and free up cash to balance out the assortment.

To learn more about how ERS is helping distributors, manufacturers, retailers and brands contact us today.