How to Pick an Inventory Management Solution that Scales with your Business

With the right inventory management solution in place, distributors can flex and adapt quickly regardless of market conditions, challenges or changing business models.

During the startup phase, distributors focus on launching their businesses, building market share and creating sustainable business models. Setting up shop, establishing physical or virtual locations, staffing up, choosing product lines, and finding customers are all top of mind during this stage, and rightfully so.

But once those “early stage” challenges are behind them, distributors have to think about scaling up, strategically expanding their markets, increasing sales and building their customer bases to the point of profitability (and beyond).

To support this mission, software solutions must adequately scale with their users. To make sure this happens, companies must invest in the right solutions that not only meet their current needs, but that can also flex and adapt quickly to the needs of an expanding organisation.

For any wholesale distributor that’s operating in today’s fast-paced, e-commerce-oriented selling environment, inventory management is one area where “scale” truly counts. For example, a growing company may make any (or all) of these moves in an attempt to grow revenues and market share:

  • Expanding into new geographies (e.g., through acquisitions).

  • Overhauling its e-commerce approach to sell more online.

  • Taking on new product lines and supplier partners.

  • Creating stronger alignments with suppliers and/or customers.

  • Developing a “leaner” inventory approach (i.e., one that reduces inventory levels while minimising stock-outs).

  • Finding new ways to drive costs out of the distribution process.

Achieving these and other growth goals can be easier and less costly with technology, but only if that technology is flexible, scalable, adaptable and cloud-based. By helping distributors minimise manual work and streamline their operations, for example, a scalable inventory management solution can reduce costs, improve efficiencies and simplify even the most dynamic distribution environments.

In this white paper, we explore how scalable technology helps distributors solve their biggest pain points, show how to pick a solution that will scale up as distributors grow and hear how one company successfully transformed its inventory management approach with a scalable, cloud-based solution.

Easing Distributor Pain Points with a Scalable Inventory Management System

Achieving optimal inventory levels is a delicate balance. Buy too little and you wind up with stock-outs and unhappy customers; procure too much and your carrying costs and obsolete inventory levels go up. Intent on running leaner operations that aren’t saddled down with excess inventory or plagued by wasteful processes, more distributors are examining their inventory turnover and coming up with good management strategies that satisfy customer demands while also reducing (or eliminating completely):

  • High inventory costs

  • Uncertainty due to fluctuations in demand

  • Risk of loss

  • Stock-outs

  • Inventory turnover rates

  • Unnecessary order duplication

  • High levels of working capital tied up in inventory

  • Excessive storage costs

  • Imbalanced shipment lead times

  • Lost customers

  • Loss of materials due to carelessness or pilferage

Combined, these problems can add up to substantial financial losses—all of which can be avoided or mitigated by using a scalable inventory management platform that enables high levels of inventory visibility on a real-time basis.

Inventory management includes product ordering, storage and control. It’s about having the right products in the right quantities in the right place and at the right time—and all at the right cost. By governing non-capitalised assets and monitoring the movement of products from distributor to end user, inventory management requires detailed record-keeping for every stocked product.

Good Inventory Management: From Point of Origin to End User

A critical aspect of supply chain management, good inventory management extends from the point of origin (e.g., the manufacturing plant or distribution centre) to the end user.

Left up to chance, it can either tie up cash and hurt organisational profits, or it can save companies money while also improving their profits and bottom lines.

Consider these two scenarios:

  1. When you overstock in anticipation of future demand, your company may wind up saddled with “dead stock” in its warehouse, DC or retail store. This dead stock consumes working capital and uses up physical space all while sitting still. The products in question may also be on the brink of obsolescence, rendering them un-returnable and useless in the near future.

  2. When you don’t hold enough inventory in stock, you risk running out right when customers ask for the goods. Maybe the current tariff situation has you jittery about foreign supply sources, or maybe your firm’s new e-commerce site is creating new, unprecedented demand levels for certain items. Whatever the culprit, you now have a stable of unhappy customers to contend with.

In the past, companies tried to avoid these problems by performing physical counts out in the warehouse and then reconciling those counts with paper- or batch-based systems. This task took place on a scheduled basis (e.g., at the end of a set period, such as a month or a quarter), with the result being updated inventory figures.

Today’s inventory management processes incorporate advanced technology. Scalable inventory management software, for example, enables real-time updates of inventory counts on a regular basis. When this process takes place in the Cloud, the information can be readily shared with all users and stakeholders across multiple business units and locations.

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