If you’re a wholesaler or distributer of some kind of durable good, the smooth running of your supply chain is everything. Late or incorrect orders can strain your relationship with clients, and destroy your professional reputation overnight! I’m sure you’ve put a lot of work into getting your business off the ground and establishing its unique brand, so this should be your worst nightmare! No matter what you’re selling or who you’re selling it to, it all starts with your inventory. Here are a few proven techniques to ensure it doesn’t get out of control.
All good suppliers operate according to a well-planned annual inventory budget, and this needs to be prepared well in advance of any actual procurement. Unfortunately, it’s not as simple as adding up the cost of your stock and securing that amount of capital. You need to make sure your annual budget is the total cost of owning your inventory for a whole year. This should include the cost of materials, the fixed operational costs, carrying and logistics costs, expenses for redistribution and any other miscellaneous costs which come into the cost of ownership. One of the worst things that can happen to suppliers and distributors is getting caught out by their finances, and having to scramble to source capital from somewhere else.
Commonly called an “automatic inventory system”, this is a management system that keeps track of the quantity and value of all the items you have in stock, so that you and your managers are never out of the loop. Of all the different methods there are for managing your inventory, this can be one of the most foolproof if it’s applied and maintained properly. Most modern suppliers and distributors will use enterprise resource planning or inventory management software hand in hand with an inventory optimization tool. There are many different options you can choose from here, each with their own unique features and nuances. Have a look around the market and find a system that works for your company.
Any business like yours is going to have its success dictated by various external conditions which can fluctuate at a moment’s notice. Market trends, seasonal demand, shifts in the economy and changes within the businesses you supply to can all come into play. Any one of these factors can set off a chain which dramatically changes the demand on your inventory, so having a keen understanding of them is essential for maximizing your chances of success in the future. One thing that can work absolute miracles in this area is automated demand forecasting. This will take a large part of the guesswork out of how much inventory you need to be carrying through any given period. Automated forecasting tools will monitor your supply chain, and calculate an item’s future demand based on historical sales. Of course, you’ll have to take various economic factors into account too, but one of these programs will make things so much easier!
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