Wholesale distribution is realising the importance of a digital transformation. Many wholesale distributors want to digitise and streamline their business, but some are not even sure where to start. Some wholesale distributors rely on paper and spreadsheets to manage supply chain processes because they are stuck with disconnected or disparate legacy systems. It can lead to siloed workplaces and make collaboration difficult. Accurate data is also a problem as there is no single source of information.

Many wholesale distributors operate blindly and without visibility from end to end of their supply chains. This can be felt across the entire business, but for distributors the biggest challenge is acquiring and maintaining the right amount of inventory in order to maintain service levels with customers while minimising capital investment.

Inventory Optimisation: The Challenge

Stock optimisation involves more than simply looking at the past and making a guess about what number is right.

Wholesale distribution is used to providing customers with the products they want, at the best price and at the right moment. But today’s market conditions make it more difficult for them to deliver this service consistently. Distributors must now consider a variety of factors when managing their inventory. These include the traditional factors, such as demand patterns that are unpredictable, availability issues, long lead-times, and new business model.

With paper-based systems or disconnected ones, it is difficult to adapt. When data is spread across multiple excel spreadsheets and systems, it can be difficult to identify disruptions. By the time distributors have compiled the data together, the data may already be outdated.

There is no one perfect way to optimise inventory. Depending on the value delivered to customers, different strategies can be used for inventory optimisation. Sometimes, having more inventory is the best strategy. This is because availability, risk reduction, and interest rates can make it cheaper to keep inventory, especially when there’s a high demand and a high inventory turnover. JIT (Just in Time) and lean methods may be needed to supplement the current environment, which has more complex and sophisticated needs.

Wholesale distributors should begin the journey to achieve end-to-end inventory visibility.

E2E Visibility: The Road to E2E

This journey begins with the willingness to adapt. There are many benefits to this. Wholesale distributors are able to increase their revenue by being responsive to demand changes and avoiding stockouts or shortfalls due unsatisfied orders. Distributors can cut costs by eliminating redundant inventory and reducing transportation costs due to disruptions or poor planning. Optimising working capital is achieved by reducing inventories and releasing cash to reinvest or increase margins.

Every distributor will have a different roadmap for achieving end-to-end transparency, but there are some basic goals that must be met to reach business objectives. It is not the end, but a journey. Distributors want to minimise surprises and manage exceptions to create optimal business results. To achieve business goals, there are a few areas that need to be addressed.

  • Create a single source truth to connect operations, sales and marketing with finance and optimise decision-making.
  • Integrate data from upstream and downstream networks to get a real time picture of your supply chain
  • Digitalise assets and create a digital replica of operations
  • Automate real-time planning of supply chains using predictive analytics

Real-time data processing will change the business process fundamentally. Distributors will be able to optimise their outcomes by making tradeoffs based on an accurate view of the supply chain. This will enable most distributors to switch from a supply side to a demand driven business model, as real-time data is not only old disconnected data but also events.

The conclusion of the article is:

The last year taught us that business models must be flexible and that the systems used by distributors need to be able handle large market shifts and disruptions. It is important to use intelligent tools that can manage changing demand and create flexible business models by analysing real-time information and using predictive technologies. The end-to-end transparency not only streamlines processes but also generates valuable information to help make real-time decisions. Wholesale distributors are able to innovate their supply chain, and determine the optimal inventory levels automatically. This allows them to develop the best practices in growing their business.

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