Supply Chain Management with Wholesaler Distributor Software
This article examines some steps wholesalers can take to get a better handle on their supply chains, starting with implementing wholesale distributor software.
Wholesalers live or die based on their customer relationships and customer service. As a result of the ongoing Coronavirus disruptions to the supply chain, many wholesalers have been put in a nightmare situation of being out-of-stock, unable to resupply, and losing big customers because of this. In the face of supply chain backlogs that most wholesale distributors have never experienced, what can wholesalers do to survive?
Some proactive supply chain management steps that can be taken include:
- Implementing the right technology
- Improving vendor networks
- Diversifying vendor relationships
- Controlling Costs
- Getting a better handle on demand
- Managing inventory better
- Making Supply Chain Management a priority
Supply Chain Management for Wholesalers
Supply Chain Management as applied to wholesale distributors means the management of the flow of goods from manufacturers’ points of origin to wholesalers’ warehouses or drop-shipped to retailers or end-consumers. As manufacturing moved to Asia, the supply chain essentially involved contracting with manufacturers in Asia, arranging sea freight from Asia, port clearance at US ports, and transportation by rail or truck to distributors’ warehouses. The onset of the Coronavirus pandemic completely disrupted the global supply chain to an almost unprecedented degree.
Though the Coronavirus pandemic is a black swan event, it has also served as a wake-up call to highlight the continuing risks to the global supply chain of having more and more manufacturing concentrated in China. These risks mean that even wholesale distributors that are weathering the current Coronavirus disruptions, should focus on what they can do to improve their supply chain management.
Implementing Wholesale Distributor Software
In the past, many distributors relied on multiple disconnected systems to run their businesses. If your business operates this way, it will make supply chain management very challenging. Effective supply chain management requires a comprehensive view of your vendor networks, control of purchasing, control of inventory levels, and insight into sales and demand planning. Unless all these systems and processes are integrated you will not be able to identify the problem areas in your supply chain and the dials that can be turned to manage them effectively. The unprecedented supply chain disruptions as a result of the Coronavirus pandemic have forced many wholesale distributors to move to integrated Cloud-based wholesale distributor software, which provides the tools necessary for supply chain management. This is now mission-critical and most distributors that haven’t done this will struggle to survive.
Improving Vendor Networks
Many distributors used to routinely single-source lines of products from particular vendors. While this works well most of the time, it creates massive risk under the conditions created by the Coronavirus pandemic and associated lockdowns. With wholesale distributor software, distributors can maintain full vendor history records that track for each product, every vendor that it was purchased from, when it was purchased, in what quantity, and at what price. This is the first step towards improving and diversifying vendor networks. With better information on which vendor relationships are working and which need improvement, invest in the relationships that are strategic. The most successful relationships have open bi-lateral communication with agreement on objectives. Create processes for scheduled relationship reviews to continue to improve and create value, assess performance against objectives, and proactively address differences and conflicts.
Diversifying Vendor Relationships
In addition, to improving existing vendor networks, there also has to be a focus on diversifying vendor relationships to manage risk. Distributors should start to implement the RFQ (request for quotation) features offered by the better wholesale distributor software solutions. By doing this, distributors can start to explore more supplier options and start to develop relationships with multiple vendors. If you’ve always purchased a product line for a particular vendor, actively seek to cultivate an alternative that you can turn to if disaster strikes.
Cost control is always a key focus for wholesalers, but in these tumultuous times, this is the difference between survival and failure. In the context of supply chain management, with wholesale distributor software distributors will be able to continually review vendor prices. This will allow distributors to get ahead of supply chain-induced price shocks and reroute their purchasing accordingly. While having great vendor relationships is always a good objective, having a great relationship with a vendor that is having problems and has to raise prices won’t help you. As indications of problems appear in pricing, distributors should focus on developing alternatives. To create supply chain options and alternatives, distributors need to explore and prequalify more supplier possibilities that might be needed in times of disruption.
Getting a Better Handle on Demand
Wholesale distributors should use business intelligence functions in their wholesale distribution software to explore all sorts of demand scenarios and plan for them. Also involving strategic customers in demand planning and forecasting can lead to deeper relationships with these strategic customers. Explore options to have strategic customers guarantee a base-level of demand in return for some degree of priority with respect to supply.
Managing Inventory Better
With wholesale distributor software that offers full inventory management and replenishment features, review inventory level settings constantly. Too often, distributors don’t bother to tighten up safety stock levels or review lead times. Making it an objective to reassess and update safety stock, lead times, and use rates every vendor review cycle will lead to tighter inventory control. Supply chain management focusing on compressing shipping times and review cycle times will then translate directly into less capital tied up in inventory.
Making Supply Chain Management a Priority
Supply chain management has historically not been a high priority for wholesale distributors that typically dealt with small numbers of known suppliers and had simple supply chains. The current supply chain crisis has shown what can happen when things go awry. Distributors need to take supply chain management very seriously going forward. Bring together leaders in sales, purchasing, inventory management as a team that meets on a regular basis. Establish company-wide objectives that cut across department lines and give every department a stake in successful supply chain management. Ensure that there are regular reviews designed to reevaluate processes and systems and create contingency plans for other disruptions. Conduct regular risk mitigation planning sessions.
The first step to coping with the current supply chain crisis is to implement a comprehensive wholesale distributor software solution. Without this, you won’t have the data to address the complex supply chain problems that are everywhere today. If you need to upgrade your technology, contact us today to demo Accolent ERP a Cloud-based wholesale distributor software solution. Once you have the right technology in place, make supply chain management a priority, and take some of the steps identified above.