By Morgan International Staff Writers
It is true that wholesale distributors are operating within a challenging global environment. Things have been tumultuous since the global economic crisis of 2007/2008 and widespread instability has impacted this industry, just as it has in many others. Wholesale distributors are experiencing increasing and/or unstable costs, shrinking margins, increasingly demanding customers, and new competitors coming from places that were not expected. These external forces are problematic for wholesale distributors, and to not only weather the storm, but hopefully to thrive, decisive action must be taken. The supply chain can be optimized to provide the answer in 4 key different ways:
- Demand planning
Create a robust and forward looking demand plan, segmented at an appropriate level – i.e. by product, customer, geography, and sales channel.
- Optimize inventory
This of course ties into point one – once you have a good idea of what the demand will be then you can plan the inventory to match the demand. This is basic demand and supply, and not getting stuck with stock that is not required and/or being short of stock that customers are willing to pay good money for.
- Transport optimization
One of the biggest costs for wholesale distributors is usually transport costs. There are route planning tools available that can offer large cost savings by optimizing routes. Not only is it a cost saving opportunity, but it may be the difference between the customer getting their order on time, or not!
- Integrate planning processes
We spoke about planning demand and supply, but a more powerful tool is to integrate that detail with risk and market change planning. This allows for a more predictable integrated planning process.
As is often the case, it is when businesses are most under pressure that to recover and to thrive they need to invest. This is the case here, as all of the suggestions have financial repercussions. This may mean needing to raise additional funding, but the success of wholesale distributors in the coming years will be dependent on investing in technology and planning.