For your product to travel from manufacturing plant to the consumer-end, it needs to change hands multiple times. This may involve multiple suppliers, distributors, field sales personnel and retailers.
If you combine all these diverse challenges, you can see that inventory distribution is an intricate challenge that comes with many incorporated difficulties. You need to navigate and manage this steep challenge to manage your distribution network.
A smart inventory management system enables you to incorporate, understand and manage the diverse challenges.
Why inventory management is Critical?
If you walk-into any grocery store, you would be amazed by a list of products labelled with discounts varying from 40% – 65%. While there could numerous reasons to explain the excess of stock, the inefficient stock management is almost always a permanent fixture of this problem.
Without an inventory management system, you could have your valuable goods getting distributed unevenly across multiple retail points. Or worse, this distribution may not resemble the actual demand of products across the various retail stores.
This almost happens to be a permanent fixture of not having an accounting system to manage the inventory.
Inventory management can also help you regulate transit costs and get the best product margins. It ensures that you are constantly getting the highest pricing for your product.
Tight Integration of Supply and Demand Network
If you look into successful companies, you can see a tight integration between the supply and actual demand in the marketplace. This means that your production or stock acquisition is geared to meet the predicted product demands.
If you fail to achieve this tight integration, you are most likely to end up producing excessive or insufficient goods. In either case, your supplied goods may become inadequate to meet the actual market demand.
In-short, you need to have information about the ongoing trends and sales updates of goods at each touch point.
A unified inventory management system lets you update stock information easily on each touch point. Afterwards, all these data could be streamlined to a single dashboard.
This makes sure that your entire customer portfolio information is always available.
The constant monitoring also delivers you the flexibility to easily adapt to fluctuating market conditions.
Stay on top of the Game with right Distributors KPI
As mentioned earlier, you need to always keep a pulse on the stock flow information to make smart decisions.
This information is procured by following the right KPIs for your inventory.
For a beginner, the distributors should have access to the influx and supply of the following goods.
For an FMCG company, the useful KPIs could be
- Current stock availability
- Sales done during the day
- Revenue acquired during the day
- Dates of different products
If you are following these metrics, the distributor may avoid losing track of the information concerning stock supply and demand in a particular geography.
You can also collect available information about each part of your entire sales cycle.
This allows you to potentially oversee and predict any surplus or crunch issues.
In case your distribution remains complex, there should also be a reasonable way to re-evaluate the efficiency of your distribution.
Forecast and Manage Stock Demands
The inventory turnover is the most useful metric of evaluation when you want to have a single overview of your inventory distribution network.
This allows you to instantly glean information about the demand and inventory availiabilty.This data allows you to either accelerate or slow down your inventory flow. You can also streamline multiple parts along the process chain such as inventory acquisition, raw material procurement, manpower hiring, etc.
You can also evaluate your marketing challenges based on this market demand.
If you have a high inventory turnover, this means that you have a healthy market demand. It also means that you have the ability to periodically sell-out your older stock that permits you to focus on procuring the latest stocks.
A fragmented inventory management means that you could be pushing goods without the backing of the actual market demand. This will easily lead to your products getting overstocked or under evaluated.
Agility of Inventory Distribution
If you have an agile internet network,it will transpire to all the other aspects of your business. It may even be the most critical factor, second only to actual product quality.
This will also help you have better relationships with your retailers and distributors.
In the end, this may cumulate into a large market advantage over your competitor.
In the current marketplace, there are numerous factors that could present you with a competitor edge or vice versa.
This includes product pricing, brand value, packaging, etc.
Among these different factors, you can see that optimizing your inventory distribution could be the easiest way to improve your distribution process.
For maximizing your distribution proficiency, you would actually need an efficient inventory management system.