Rewriting the Supply Chain Playbook: Distribution Software

distributionEffective supply chain management is what often separates successful wholesale distributors from those that continually struggle. Company leaders are turning to advanced supply chain solutions to become strategic, demand-driven businesses that are able to move beyond simply focusing on low prices. To realize these gains, you must move beyond common spreadsheets and adopt integrated software tools that offer powerful organizational and planning features. Your warehouse management software and distribution software solutions should give you the ability to model complex supplier constraints, uncertain demand patterns, and multi-location inventory networks.

With growing costs, new competitors, demanding customers, and very small margins, successful wholesale distribution centers need extremely effective supply chain management to separate themselves from those that are struggling. One such solution is Acumatica. Acumatica software helps with inventory, purchase order, sales order, and requisition management. Acumatica’s Distribution Management Suite allows you to manage sales orders, track inventory, fill orders, improve purchasing, and provide customer support from anywhere.

The struggles of wholesale distributors are extensive. Even the core asset, inventory, presents a challenging balancing act in and of itself. Too much inventory could result in resource waste and the risk of products becoming obsolete over time. Too little inventory could mean losing potential customers due to lack of supply. The new supply chain goal for wholesale distributors is to more effectively buy and stock as little inventory as possible by choosing instead to quickly source, ship, and deliver product on premises or to the customer. To accomplish this, every wholesale distributor needs to rewrite their supply chain playbook with these three actions in mind:

Action 1: Anticipate and Forecast Market Demand Accurately

Accurate demand planning is critical in order for wholesale distributors to increase margins in today’s dynamic business environment, but wholesalers may lack immediate access to consumer demand patterns. For this reason, demand planning systems include advanced forecasting capabilities that anticipate future inventory needs based on many factors. These include demand history, customer orders, new product introductions, and forward buying opportunities.

Action 2: Reduce Safety Stock Levels 

When working to improve margins and offer value-added services, wholesale distributors must establish new methods for controlling inventory levels. Too much inventory creates excessive discounting and possible obsolescence. Too little inventory (or inventory in the wrong location) causes missed sales revenue. Many are moving away from old approaches to setting inventory targets, such as holding two weeks of supply for all products at a location. Instead, inventory planning, for example, sets inventory targets at a single location by taking into account time-phased demand signals and service level requirements. This removes to the temptation to have too much inventory on hand “just in case” because the actual inventory need is based on actual data not feeling.

Action 3: Buy Inventory on an As-needed Basis

In an industry that tends to be dominated by buyers, it’s no surprise the default driver is purchase price. With a broad inventory portfolio to manage, a huge number of SKUs, and an orientation toward high stock positions, it is natural that the emphasis is on buying at a good price. Procurement optimization automates the balancing act that buyers typically do manually delivering a more accurate and organized view of information such as how much supply is actually on hand, what has been ordered, as well as the status and lead times of incoming products. This allows the organization to make more informed decisions such as assessing quantity price breaks based on dollars or points against how long excess inventory may have to be held.

Mindover Software can help you be a winner in supply chain management through our Acumatica software solution and other warehouse management solutions. Please contact us to learn more.

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