Supply Chain Inventory Management: The Ultimate Guide




Supply chains are becoming ever more complex. Wholesale distributors, retailers, and even consumers along the supply chain can purchase products and goods from almost anywhere in the world. The global economy makes it easy to access a wide range of products and goods. As the economy becomes more expansive, wholesale distributors need to consider how they can leverage suppliers from around the world in order to meet the demands of their buyers while keeping costs low. 


Your supply chain and inventory management processes most likely have several moving parts to support these various activities.


It may seem a bit overwhelming to try to develop both high level and granular views of this complex process. However, the rewards of better partnerships with both manufacturers and retailers make it worth the time to implement a strong supply chain inventory management system. 


In this guide, we will take a deep dive into the world of supply chains and inventory management and explore how a tighter integration between your supply chain and your inventory management system can help your business grow and become more efficient.



The Supply Chain At A Glance For Wholesale Distributors


As a wholesale distributor, you probably confront difficult challenges when it comes to your supply chain. By purchasing and managing high volume goods, your business operates with a high risk, high reward value proposition. And if you don’t follow the processes in place to move your goods effectively to retailers, you could end up with huge losses on your hands.


In addition, most wholesale companies face extended supply chains. To stay ahead, you must effectively partner with a variety of manufacturers as well as retailers. Throughout this logistical journey, you must focus on one important goal: offering value as a partner. 


An important part of your partnership with manufacturers is leveraging and sharing your expertise on your buyers and even the consumer at the end of the supply chain. With better KPIs on products, wholesale distributors can increase their value as partners to manufacturers by telling them what sells and what doesn’t. In depth knowledge of the supply chain can help align strategic goals with your manufacturers.


On the retailer side, your organization must reliably provide products in a timely manner. Exceptional warehouse inventory management is absolutely essential to fulfilling this aspect of the partnership. Features like pick, pack, and ship, as well as RFID technology can help you stay on top of their long supply chains.


Managing your supply chain also offers a host of benefits for your back-end processes. This gives you the knowledge and data to make strategic decisions common to your business. For example, supply chain visibility is key in responding to novel business challenges, like new tariffs.



How Is Inventory Management A Part Of Supply Chain Management?


The supply chain is the management of inventory levels through the coordination of buyers and suppliers, to ensure on-time delivery of products and goods. And at the heart of the supply chain is inventory management.


For small business in particular, inventory management is a key component of this process. It keeps you informed about stock levels of your inventory throughout the supply chain lifecycle. It can also provide strategic insights when its managed correctly, such as ordering and shipping patterns, so you can forecast and plan your inventory according to your business model and fluctuations.  


Inventory management is a fine balance between supply and demand. Does your product experience variable sales volume? For example, do you sell seasonal goods? 


The digital economy also brings new opportunities for variable sales. For example, a successful marketing campaign could cause sales to skyrocket. Proper inventory management in the supply chain can help you plan and prepare for these spikes and avoid common fire drills that spring up when you don’t closely monitor your stock levels.  


For wholesale distributors, the heart of the supply chain is the warehouse. It is here that your partnerships with both manufacturers and retailers meet. It is critical to build a capable warehouse inventory management system in order to both provide value to partners, as well as to maintain the margins on which your company thrive.


It’s possible to automate inventory communication with suppliers throughout your supply chain. Instead of relying on manual updates or communications like email, you can utilize an inventory management system that automatically keeps suppliers informed of stock levels through the use of barcodes or RFID tags. A good inventory management system might also offer a virtual warehouse, so you can understand exactly which goods you have on hand and where they are. 


The warehouse is also central to the distributor’s relationship with the retailer. The retailer needs goods reliably and quickly. You can leverage excellence in the warehouse to help meet these demands, through things like a kit configurator, which allows retailers to sell more products to customers who want to buy them packaged together.


The demand generation function of your business is also critically dependent on its supply chain. Exceptional inventory management can help your sales team know what goods they have available to promise to buyers. This can help them design strategically targeted promotions.


We have seen how inventory management integrates with the supply chain in order to mediate between the supply and demand aspects of your business. But what are the benefits of actually implementing this process? 



Benefits Of Supply Chain Inventory Management


Well run inventory management can have immediate, positive impacts on your business. Here are a few your business could benefit from:


  1. Maintain leaner stock levels with strong integrations. Keeping tabs on stock is critical to taking your business to the next level. Running leaner stock levels can directly help your business because you have less capital tied up in unneeded inventory, which can then be invested in growth areas of the business. Distributors live on margins, so it is crucial to quickly remove stock that is not selling, or not selling at a high enough margin.
  2. Reduce the risk of inventory shortages. At the same time, effective inventory management takes variability into account ensuring there are no shortages. Shortages pose a major problem for your business, as buyers are extremely sensitive to delays and cancelled orders. Retailers work in a highly competitive environment. Reliability is a huge component of a distributor’s value as a partner.

  3. Sell more, strategically. With strong inventory management, sales and marketing can review which products are available to sell and a good fit for a promotion. Distributors can move beyond a mere logistics partner to manufacturers. With critical business intelligence, they can become customer experts for their manufacturing partners, increasing their value immensely.

  4. Visibility and transparency into your supply chain. Buyers want to know where their products come from for ethical reasons. They also want to know where their items are in the fulfillment process. This visibility and transparency is critical to offer to customers in order to run a successful business. Retailers increasingly want this information to pass on to ethically conscious consumers.


As with any important business decision, the most important question is: how does inventory management fit into the supply chain for your unique business? 


You should be selective in your inventory management system, ensuring that it meets the needs of your business. Here are some of the most important things to keep in mind when making this assessment:


  • What are your manufacturers like? Can they effectively integrate the information you provide them through inventory management in the supply chain?
  • What are the relationships among different departments in your business? Do they communicate well or is data siloed in different areas?
  • Is demand for your product highly volatile?
  • How complex is your supply chain? How many partners do you need to integrate with on the supplier end? How many retail outlets do you have?


Though there are many benefits to proper inventory management throughout the supply chain, there are a few risks to keep in mind while implementing these processes so you can prepare and plan to avoid them if possible.



Risks Of Poor Inventory Management In Supply Chain


Managing your inventory and stock levels is an art and a science. Your business will want to ensure it has enough product for retailers when they are ready to make a purchase. If stock levels are too high, your business could be wasting important capital in unneeded inventory instead of investing it in growth areas for the business. For wholesale distributors, there is no time to waste on low margin inventory.


In addition, poor inventory management could lead to friction between your various departments. For example, sales could oversell to the extent that operations cannot meet orders. 


You could also damage partnerships with manufacturers and retailers, thereby erasing the value you as a distributor bring.


Overall, poor inventory management within your supply chain can be felt in all areas of your business. A delightful experience is crucial to offer at every stage of your supply chain and buyer journey. Don’t let poor inventory management erase all the hard work you’ve put into creating your brand and customer experience! Don’t let it damage the partnerships you’ve built with years of hard work! 


Beyond these risks for poor inventory management, there are some risks when changing your inventory management to better integrate with your supply chain:


  1. When de-siloing information between different departments, some departments may resent losing what they consider their special territory.
  2. There could be friction as stakeholders are onboarded to a new inventory management technology.


You can mitigate these risks for your business by leveraging an effective inventory management system for your supply chain. Below we detail some of the capabilities you’ll want to include in your system.



The Core Capabilities Of A Supply Chain Inventory Management System


Your business potentially has a lot to gain from integrating inventory management into its supply chain. Here are some of the most important capabilities and benefits you’ll want in your system:


  • B2B integrations with suppliers to more effectively manage procurement and leverage capabilities like drop shipping. 
  • Deep knowledge of both current stock levels and historic reports on demand so you can be prepared for variability.
  • Third Party Logistics (3PL) integrations, to ensure your product arrives to retailers quickly and accurately.
  • Supplier relations can be improved as you never have to place frantic last-minute orders.
  • Increased visibility enhances the customer experience. Today’s buyer wants to know where his/her products are and when they’ll get there.
  • A more visible supply chain also helps satisfy the modern buyer’s preferences with respect to ethical sourcing and consumption.
  • A more efficient supply chain can mean faster fulfillment times. Amazon, for example, is investing heavily in its supply chain in order to reach new one day shipping targets
  • Business intelligence through up to the minute data can help you pivot towards high margin products.



Take Control of Your Supply Chain With Inventory Management Software


You can enhance relationships with suppliers, integrate different business units in your company, and provide more supply chain visibility to enhance your customer experience with the right automated inventory management system. When selecting this software, you will want to use a supply chain inventory management system with the following features:


  • Easy to use dashboards allow you to better visualize your data. Visualization is an important tool in today’s business world, allowing you to leave spreadsheets and clunky databases behind.
  • iPad app for warehouse staff creates a more agile and accurate warehouse, better able to meet your business needs.
  • Unlimited Matrix of Real & Virtual Warehousing allows you to have an extremely detailed and useful image of your inventory. The virtual warehouse makes things clearer.
  • Data is no longer siloed between business units and devices. With cloud access, you can utilize your data anywhere and from a variety of devices. Different departments will all have access to the same reports which means smooth sailing for your business units.
  • Real Time Reporting should allow you to uncover strategic insights. By tracking KPIs, you can improve your business through a better understanding of your day to day operations. You can also become a customer expert and increase your value to manufacturers.
  • Supplier Integrations. By choosing the right inventory management software for your supply chain, you can take advantage of innovations like drop shipping, reducing your need for inventory. You’ll want options for supplier integration as well, such as the ability to use a B2B portal or EDI (Electronic Data Interchange).
  • Increased visibility of your stock will improve the customer experience. You will also want the ability to track how well your business is serving customers through CRM software. CRM allows you to track the entire lifecycle of a purchase, ensuring your reputation and brand remain immaculate.
  • Financial Integrations are crucial for the increasingly complex supply chains facing your business. With a potentially global supply chain and complicated transactions, you can help your business by choosing an inventory management software that seamlessly integrates with applications like QuickBooks or other financial tools.


Systum brings together all these capabilities in order to help you improve your supply chain, one of the most critical aspects of any business. Systum takes many functions, like eCommerce, inventory management, customer relationship management, and partner integrations with industry leaders like Amazon and eBay, and combines them in one easy-to-use software. Dashboards provide intuitive visualizations that make your data work for you.


To learn more about how Systum can help your business better manage its supply chain, check out our all-in-one wholesale distribution software and sign up for a free demo.


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