5 Best Inventory Management Focuses for Wholesale Distributors


Companies must run their warehouses on a tighter profit margin more than ever. Even 10 years ago, wholesale distribution companies could be less streamlined and tech-savvy and still have loyal customers. That isn’t the case any longer.

According to the Bureau of Labor Statistics, the number of U.S. warehouses has increased almost 7% in the last five years. Unfortunately, we didn’t also see an increase in the number of companies looking at innovations like supply chain automation (inventory control automation being included in that). Around 40% of companies have failed to seriously consider automation, but that number is expected to drop to less than 20% by the end of the year.

We’ve compiled five of the best areas in inventory management you can focus on as a wholesale distributor. The retail industry as a whole is experiencing a sort of renaissance, but that hasn’t decreased the need for warehouses. Companies that fail to embrace resources and innovative processes, however, will be outdone by their forward-thinking competition.

1. Use Technology to Automate and Streamline Your Warehouses

We don’t mean to beat a dead horse. However, that “40% of companies have failed to seriously consider automation” statistic means that not enough people have realized its importance. In our previous article, we describe how you can create a better inventory management system for your wholesale business. We describe many of the benefits of cloud-based inventory management systems, but where else could you integrate technology to improve your business operation?

Radio Frequency Identification Will Increase Productivity in Your Warehouses

There are plenty of areas where you can integrate technology into your wholesale distribution business. We present you with one of the best ones (in our opinion). If you’ve already committed to integrating a cloud-based inventory management system (IMS) into your warehouse operations, then you’ll really like this potential feature.

Radio Frequency Identification (RFID) on items in your warehouse can save substantial amounts of manual employee labor. Without RFID technology, when you receive product at your warehouse, employees have to unload and scan each item’s barcode. It can take anywhere from two to three hours for employees to scan, sort, and count inventory. With RFID-tagged pallets or cartons, this process could require as little as 30 minutes.

When items are tagged at the manufacturer, it leads to greater inbound and outbound accuracy. If your IMS integrates with this tech, then you’ll be able to track the location of your warehouse inventory in real time. When RFID portals and readers are integrated into your supply chain, data will be uploaded directly into your IMS.

According to Barcoding Incorporated “RFID tags can be used to address government compliance mandates like farm to fork. The tags can store the necessary tracking information, from manufacture date, shelf life, expiration dates, lots, batch, serial numbers, etc.” via RFID in Warehouse and Distribution Center Management.

2. Create a B2C Customer Experience for Your B2B Buyers

Provide Informative Content to Your Buyers … Or Your Competition Will

According to the DemandGen 2016 Content Preferences Survey, “51% of B2B buyers are looking at more content before they make purchasing decisions” when compared with the previous year. Additionally, slightly less than half will read three to five pieces of vendor-produced content prior to engaging with your salespeople. Now who said blogs and social media were just for B2C industries?

Here are some of types of top content that your B2B buyers want to see:

  • White Papers (82%)
  • Webinars (78%)
  • Case Studies (73%)
  • Ebooks (67%)
  • Blog Posts (66%)

Those numbers are the percentages of B2B buyers who consumed that type of content in the past 12 months prior to making a purchase decision. Even more interesting is that four out of the five are types of content that site visitors will give you their email address to have.

Your customers are doing more research than ever which gives you an opportunity to build their trust before they engage with your sales team

Amazon Has Changed B2B Buyer Expectations Too

“We expect integrated inventory and order management to take a front seat in 2018. As more and more B2B buyers use Amazon and other marketplaces, they’ll become accustomed to having all their order details available in one place.”  

What this means for you as a wholesaler is that you must bring the B2C purchase experience to your B2B buyers. Your customers want a streamlined order and fulfillment process. In order to provide that, you must continue to balance your customers’ expectations in one hand and cost on the other. Approximately 69% of B2B buyers prefer to make purchase orders using a credit card or online gateway. Has your competition eased that pain point for your target customer base?

3. Increase Your Inventory Forecasting to Reduce Costs

As we mentioned, technology has worked its way into every part of the supply chain. When you use a cloud-based IMS that allows you to track and report on your inventory in real time, tasks like purchase decisions can become not only automated, but also driven by data collected in your warehouses.

Wholesale distributors are serving more people than ever in the global economy, and many are doing so with outdated technology. Many distributors point to inaccurate forecasting as a primary business headache. A little less than two thirds of participants in an Industry Directions survey reported their forecasting accuracy as less than 80%. This ripples throughout the entire supply chain, from the manufacturer to the retail store.

When you invest in better inventory forecasting, whether by adopting technology or new practices, you see fewer overstock and out-of-stock cases. Overstock cases use up valuable resources (money and space) you could be using to house in-demand inventory. In order to clear that space, you’ll have to slash prices to move the overstock out of your warehouse.

Out-of-stock issues, on the other hand, harm the customer experience. A B2C customer might take their individual business to another retailer. A B2B customer may take their purchasing decisions to your competition. That could spell a serious financial loss for your company.

If you’d like to read more about the sorts of key performance indicators you should watch to improve your inventory forecasting, read our article: Improve Your Inventory Management Processes, Skyrocket Your Success.

4. Optimize Your Warehouse Layout to Reduce Picking Time

In terms of cost, warehouse space costs $5 per square foot on average. But just because it is a relatively low expense doesn’t mean you shouldn’t use it as best you can. We found pretty standard recommendations regarding warehouse layout. The fastest-moving product should be close to the loading dock. These items should enter and leave the warehouse easily. Your layout should also accommodate demand spikes for your slow-moving inventory.

Optimize your warehouse layout to increase employee productivity and the customer experience for your buyers.

Balance Your Inventory Across Your Warehouses

By using an IMS that also has Enterprise Resource Planning (ERP) will allow you to save money in reordering costs. You’ll be able to identify warehouses with surplus products and ship it to warehouses with low levels of that same product. You’ll pay only for transportation.

5. Standardize and Duplicate Your Processes

Before you standardize your inventory management processes and duplicate them across your organization, you’ll want to benchmark them. Benchmarking will allow you to measure your past performance and identify which processes and systems are worth duplicating. You should instill best practices in a top-down fashion across your business. The profit margin for wholesale distribution is smaller than in years past. Only the lean and efficient companies will have staying power.

Standardizing your systems will help you identify weak points and simplify processes. Every organizational unit, from the smallest team through the C-suite, should have standard operating procedures (SOPs). Without these SOPs, your operations could be crippled due to the absence of one employee. SOPs also allow you to train new employees more efficiently.

Integrating these five focuses into your business plan and development will help you create a lean and agile inventory management system equipped to navigate ever-changing customer demands. What changes are you making to sail your business into this tech-connected future?

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