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Wholesale Distribution

Fulfilment and Inventory Optimisation for Peak Season Efficiency

Allan O'Donnell
September 16th, 2021

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Managing peak season without proper fulfilment and inventory optimisation is like running with the bulls in Pamplona. When the main event is here, it’s a flurry of chaotic activity. Demand is hot on your heels, and there’s no time to look back.

This peak season is set to be more challenging than ever for wholesalers and distributors. They’re already dealing with continued supply chain disruptions. On top of that, mounting pressure from D2C brands and consumers exploring new shopping channels is creating intense competition.

recent report showed the 2020 holiday season (Nov-Dec) saw 50% global digital revenue growth. From the same report, ANZ also experienced 103% YOY revenue growth in the pre-Cyber Week period and 78% Christmas and Boxing Week YOY revenue growth.

This year, holiday season revenue growth is expected to push even further. At the same time, global supply chain challenges have arisen from factory shutdowns, chip shortages and port congestion. These factors are causing a knock-on effect of delays that may last through the holidays and well into next year.

The warm-up for the peak season race has already begun. To make sure you’re prepared, take stock of your process and what can be streamlined. Here are some ways fulfilment and inventory optimisation will keep you running well ahead of the game.

Reduce slow moving stock

Slow-moving inventory can take up valuable warehouse space and eat into profit as products sit in warehouse locations for extended periods. How can you make way for the increased seasonal stock? You may be able to offer attractive discounts, bundle products together, or run specific promotions to get old stock out the door quickly.

Minimise picking distance travelled

A more efficient physical warehouse layout means more stock can be picked in the same amount of time. The distance workers need to travel to complete a pick can have a significant impact. 

Review your warehouse layout and place fast-moving items where they’re more easily accessible to pickers. If items are often sold together, put them closer to reduce travel distance even further.

By optimising the routes to pick items, you can reduce the number of touches per item, minimise distance travelled, and boost picking efficiency.

Eliminate picking errors

Incorrect picking of items is a huge productivity drain. Identifying and fixing issues takes time and can leave you with incorrect stock levels until the issue is resolved. Barcode scanning solves this problem. Mobile scanning solutions ensure the correct items are picked every time.

Instead of picking from a printed pick slip, workers can pick directly from an RF scanner or mobile device. The mobile application keeps track of what’s been scanned and provides immediate feedback if incorrect products are scanned. With barcode scanning solutions, you can eliminate picking errors and speed up the process.

Anticipate demand

During the lead-up to peak season, optimising stock based on trends and changes is essential. Over ordering can result in price reductions and post-season sales to run out excess inventory. Conversely, under ordering can leave customers waiting until after peak season to receive stock. Demand forecasting, however, can help get the balance right.

To understand future demand, you need to start with hard data. What did the peaks and valleys of stock demand look like last year – and how did this compare to previous years? Is there a recurring pattern?

It’s also critical to look at changes by product lines. Take the “lipstick index”, for example. The term was coined by former Estée Lauder chairman Leonard Lauder in the early 2000s, using lipstick sales as a consumer confidence barometer during economic downturns. In the past, these products were an affordable indulgence in times where bigger purchases were out of reach. Face masks, video calls, and lockdowns, however, saw sales decline sharply. Cult Beauty’s lipstick sales fell 8% during COVID-19, while more than doubling skincare sales. The important reminder is that understanding demand by product line is key to optimising your inventory.

Demand planning uses forecast data and additional data like distribution, inventory location, supply plans, and more to turn forecasts into action plans. With cloud ERP systems like NetSuite, demand parameters right down to item level can be set using seasonal average, moving average, sales forecasts, and other methods. Automated notifications can also be triggered to ensure that purchase orders, transfer orders, and customer orders are executed on time.

Scenario planning

When focusing on yearly fluctuations, short-term trends can be easy to miss. For example, in 2020, lockdowns impacted the usual demand in geographies like Victoria, Australia. 36% of the year’s online retail purchases for the region happened between July to October during state lockdowns. Online orders declined over the usual peak period of Nov – Dec.

It’s a stark reminder that anything can happen – and sometimes does. While it’s essential to look at yearly trends, it’s also beneficial to consider demand and scenario planning. You can’t plan for every eventuality. But scenario planning allows you to examine the impact of different possibilities and prepare an action plan.

Distributed inventory

Along with seasonal fluctuations, demand also varies by geography. Surf equipment, for example, is more popular in Australian coastal locations than regional locations. For distributors with multi-location warehouses, this brings a great opportunity. By keeping warehouse inventory in line with demand by region, you can reduce shipping times and exceed your customers’ expectations.

When stock is over or under requirements for each location, inventory management software can make stock transfers between warehouse locations much more efficient. Live visibility of stock by location can also keep you a step ahead of trends and changes as they happen.

Real-time inventory reporting

2020 brought many unexpected changes – particularly to inventory. Demand shifted dramatically, and supply chain issues created some stressful times for wholesalers. Regular reporting will provide visibility of changes, but a real-time view lets you react faster to minimise the impact of changes.

Cloud-based inventory management systems bring live dashboards with customisable reports. Stock levels, trends, alerts and reminders all become available at a glance.

Automate stock levels

To support retailers and sellers at a critical time of year, wholesalers need to manage an uninterrupted stock supply. Under-supply of stock can mean lost sales during what should be a lucrative time. Conversely, too much stock means increased costs of warehousing when space is at a premium.

The ability to set minimum and maximum stock levels within your inventory management system can keep inventory levels just right. NetSuite is one cloud-based system that provides this functionality and also enables automated management of stock levels. By setting preferred levels based on lead time, demand, and days to supply, you can avoid both stock-outs and over-ordering. Alerts can even be triggered if stock falls below predefined levels.

With automated stock replenishment, triggers and automation all working together, you can keep inventory optimised, boost warehouse profitability and deliver the best experience to sellers through faster supply times.

Processes that support your systems

Your inventory management software is only as good as your processes. Consistent stock-outs, high obsolete inventory, and low stock turn are some common symptoms of inefficient processes in place.

The best place to start is by speaking with a wholesale systems expert. The team at DWR Consulting have implemented cloud systems for a wide variety of wholesale distribution businesses. They not only leverage industry best-practice processes but importantly take the time to understand your company’s unique requirements.

The system for success

Every wholesale distributor should be equipped to amplify its success. If your current systems are creating bottlenecks, slowing down fulfilment, or leaving you with doubts over your inventory accuracy, it’s time to build a better foundation.

A cloud ERP system streamlines and automates processes while optimising stock and brings together data and insights from across the business. ERP (Enterprise Resource Planning) is a consolidated system that includes inventory, warehousing, supply chain, procurement, sales and CRM, marketing, and more.

Working with the right technology partner is just as important as choosing the right inventory management or ERP system.

An experienced partner will tailor a solution to your needs and focus on the outcomes, not just deliver the software.

DWR delivers the tools to amplify success; by bringing the right ERP technology, process framework, and team of business experts together. Talk to an ERP expert about what your ideal wholesale distribution operations look like.

Start standing out from the competition, and take the next step to leap ahead.


Content OfferThis peak season is set to be more challenging than ever for business leaders dealing with:

🚢 Continued supply chain disruption
📦 Mounting pressure from D2C brands
🛒 Growing online customer demand

Start preparing and take the lead this peak season.

Get your guide with ideas to scale quickly and gain a competitive advantage.

Categories
Wholesale Distribution

How Wholesale Distributors Can Stand Out from Rising Competition

Allan O'Donnell
August 26th, 2021

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“Cut out the middle-man” is the last phrase wholesale distribution companies want to hear. The growing threat of the D2C model, however, is putting the relevance of distributors into question.

Manufacturers are constantly looking for ways to increase profit margins. However, the age-old model of manufacturers selling in bulk to wholesale and distribution companies who sell to retailers puts customers through a few rounds of mark-ups. These increases add to the end purchase price and can eat into manufacturer margins.

eCommerce saw massive acceleration due to COVID-19. Consumers around the globe took up digital shopping amidst lockdowns and physical restrictions. Online retail sales accounted for 19% of total retail sales in 2020, up from 16% the year prior, according to a recent UNCTAD report.

These shoppers aren’t looking back, either. Global eCommerce is expected to reach USD 1 trillion for the first time in 2022, as reported in the Adobe Digital Economy Index.

A hyper-competitive environment for wholesalers

The increase in online activity has made a more competitive environment than ever for wholesale distributors and sellers. For example, 53% of regular shoppers bought from more than 9 sources in 2020 (compared to 36% in 2019). As consumers become accustomed to buying from online-only businesses, marketplaces, and retailers offering exciting new eCommerce experiences, the stores you supply to are now fighting for customers’ attention.

D2C (Direct to Consumer) is also a growing threat to wholesale distributors. Manufacturers are building distribution capabilities to cut out the middle-man and boost profits. Facing ongoing supply chain issues, brands uncovered new ways to reach customers, and in 2020, the US experienced 46% D2C growth.
How-Wholesalers-Can-Stand-Out-from-Rising-Competition-D2C-Model-Nike

One example of the D2C manufacturer model seeing colossal success is Nike. In just 10 years, the company’s D2C model has grown from contributing 13.5% to 33.1%, nearly a third of its total revenue.

Wholesale distributors need to be more competitive than ever and create points of difference to stand out from competing channels. The delivery of first-class fulfilment, better customer experiences, and exceeding customer expectations can help distributors stay relevant and create sustained competitive advantage.

Fulfilment is the new differentiator

Fulfilment is a significant challenge for which many manufacturers aren’t yet ready. If not managed correctly, the distribution of products can quickly pull down a brand’s reputation. Wholesalers that create fast, class-leading fulfilment processes can demonstrate real value within the supply chain and truly stand out. By enabling faster replenishment, wholesalers can help sellers increase their position while decreasing their required stock on hand. To better support sellers, wholesalers need to minimise receipting, processing, and transportation times. Uninterrupted supply flowing from sellers to consumers leaves a positive impression on both retailers and brands.

How-Wholesalers-Can-Stand-Out-from-Rising-Competition-Fast-FulfilmentDemand fluctuations and unexpected changes have created additional fulfilment challenges. This was illustrated by the impacts of lockdowns in Victoria, Australia. The usual peak for online purchases starts around October. In 2020, however, 36% of the year’s online retail purchases happened between July to October due to state lockdowns. React quickly to changes, and you’ll be a critical link for sellers to keep fulfilling consumers orders with limited delays.

While ongoing supply chain issues and rapid changes have impacted fulfilment, it also represents an opportunity for wholesale distributors. Those who lead the way with fast, reliable order fulfilment can make a lasting impression on customers.

Reduce stock turn-around through accuracy and efficiency

To increase warehouse efficiency, review the systems and processes you have in place. You need to ensure the accuracy of inventory and streamline processes to reduce stock turn-around time. Key considerations include:

  • Optimised replenishment to set preferred stock levels and reorder points
  • Multi-location planning to balance supply and demand across geographies
  • Cycle counting for regular checks that maintain inventory accuracy
  • Traceability that includes full tracking by lot or serial numbers
  • Tracking of related information of products and assembly items and related transactions

Personalised pricing

When customers know they’re getting the best pricing the first time, they have confidence in you as a wholesaler and in your relationship with them. Personalised pricing can include:

Quantity price breaks

Offer lower price breaks based on set product quantities. Price breaks incentive customers to order in larger amounts and help protect your margin on smaller orders.

Pricing that rewards customers

Set special pricing for strategic customer relationships. You may want to reward loyal customers with lower pricing the longer they’ve been with you or for those who order more regularly.

Limited promotional pricing

If you want specific customers to sell more of particular product lines, try running a time-bound promotion. Let customers maximise their margin on product lines while selling more of those lines.

Report and optimise

It’s crucial to optimise stock based on trends and changes. The last thing you want is over-ordered stock taking up valuable warehouse space and becoming a cost to the business. Conversely, under-ordered stock creates bottlenecks, fulfilment delays, and lost opportunities.

Regular reporting will keep you across changing demand trends. Compare trends to previous years to identify peak periods across different product lines. Also, note short-term trends emerging where lockdowns, or eased restrictions, affect the usual product demands. Inventory and supply chain management systems bring live visibility of your stock position, backorders and commitments with real-time dashboards that keep you informed.

Demand planning and forecasting, included in some cloud ERP inventory systems, lets you estimate stock requirements with far greater accuracy. These systems also bring minimum and maximum reorder levels that can be set and triggered automatically, keeping your inventory at optimum levels.

Experiences that make you remarkable.

Store visits to sellers were one more aspect of the wholesale distribution model interrupted when COVID-19 hit. Physically meeting with customers isn’t the only way to build strong relationships, however. Whether customers are working from home or back in physical stores, relationships are about value and experience.

How-Wholesalers-Can-Stand-Out-from-Rising-Competition-Remarkable-ExperiencesYou can add more value to every conversation by starting from a place of information. Customer purchase history, account history, and records of past interactions give you a solid baseline to frame more valuable conversations. A proactive approach to addressing any past issues or suggesting new product lines based on purchase history will make you stand out. ERP systems bring data together from across the business, including finance, warehousing, sales and CRM, and more. Learn more here about how ERP is helping wholesalers deliver better experiences and amplify their success.

Your expertise is another value-add that customers appreciate. Information about product trends and upcoming releases can keep customers at the forefront. Your experiences with product quality, popularity, and competition will also get you remembered as the wholesaler with which customers want to interact.

In the eCommerce boom era, customers are now expecting consumer-like experiences. A modern eCommerce portal for sellers to view live product, pricing, and stock information whenever they need to can leave a lasting impression of you as a preferred wholesaler.

The foundations to stand out from competition

The rapid adoption of online shopping by consumers and D2C models being explored by manufacturers were existing trends that accelerated in 2020.

Wholesale distributors need to be more competitive than ever, offer better customer experiences, and examine where they can gain a competitive advantage.

Every wholesale distributor should be equipped to amplify their success; this starts with the right foundations. An inventory management and fulfilment system can be a good place to start. A cloud ERP system, however, takes things a step further to future-proof operations. ERP (Enterprise Resource Planning) is a consolidated system that includes inventory, warehousing, supply chain, procurement, sales and CRM, marketing, and more.


 

The right technology partner for an ERP implementation will take the time to understand your current systems and processes and create an individual plan for your business needs.

If your current systems are creating bottlenecks, slowing down fulfilment, or leaving you with doubts over your inventory accuracy, it’s time to build a better foundation.

DWR delivers the tools to amplify success; by bringing the right ERP technology, process framework, and team of business experts together. Talk to an ERP expert about what your ideal wholesale distribution operations look like.

Start standing out from the competition, and take the next step to leap ahead.

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