Proven Tips for Effective Wholesale Inventory Management
Inventory management is a core business function at any wholesale company. It’s critical to manage and track inventory accurately; from storing it to shipping it, there are several factors that businesses must take into account to meet customer demands. Unfortunately, it’s not as straightforward as it seems at first glance.
Particularly, distributors who operate in the foodservice industry are confronted with unique challenges that add to existing complexities. Large orders, high volume shipping, and the perishable nature of the products make inventory management extremely difficult and complicated.
Stock must be managed efficiently; otherwise, it can put you behind competitors and cast doubt over the ability of your business to sustain business and continue as a going concern entity. This blog has some proven tips for effective wholesale inventory management and will serve as a comprehensive guide to streamline your supply chain.
Let’s get started!
Formulate an all-inclusive inventory count program
Before you dig into the details of inventory management, you must have an accurate figure of inventory levels. While stock counting can be a demanding and time-consuming process, it’s necessary to ensure accuracy and completeness, and to identify and correct discrepancies in your storage process.
Therefore, you should develop a comprehensive inventory program for your warehouse. If you don’t have enough resources to carry out this activity at once, you can perform cycle inventory counting, which involves counting a small amount of stock with the intention to gradually cover the entire inventory over a specific period.
Create a detailed plan for efficient inventory management
It’s critical to have a reliable, comprehensive plan for effective inventory management in place to operate in the wholesale industry successfully. There are different types of stock management strategies that you can select, depending on the nature of your business. Here are some essential things to consider:
Holding too much on-hand inventory is not a good idea
Many wholesalers are uncertain about the levels of inventory they should keep in their facility and tend to order a higher amount of stocks. While extra on-hand inventory helps wholesale businesses avoid running out of stock, it also gives rise to unnecessary costs, which can reduce the overall profitability of the company.
Wholesale businesses that operate in the foodservice industry should be extra vigilant about overstocking. Excess inventory will serve as dead weight and will start losing value. In addition to extra storage costs, the additional stock can lose its quality and become difficult to sell, which puts a big dent on your profits.
Use lean initiatives to manage inventory—but there’s a catch!
A good inventory management practice for businesses that deal with perishable items is using lean inventory techniques. This keeps storage costs to a minimum and ensures that your warehouse has sufficient space to store your products safely. On the surface, lean inventory seems like the ideal choice for a foodservice business, but there’s a catch—an obvious one.
Using lean inventory principles will put you at higher risk of going out-of-stock. As a result, you might potentially lose clients to competitors. Therefore, it’s crucial to maintain the right balance between overstocking and lean inventory. There are many factors that you must think about, including supplier lead time, consumer demand, and more.
Don’t forget to track expiry dates
If you’re catering to the foodservice industry, it’s highly important to keep track of the expiry dates of your products. You should take a holistic approach when considering expiry dates. There are instances when hot-selling products have a shorter expiry period compared to items that are not in demand.
To ensure effective wholesale inventory management, keep a close tab on the expiry dates of all units so they can be returned to a manufacturer or other steps that can be taken to minimise loss and wastage. You may use barcodes or Q.R. codes to track inventory levels and expiry status of each product easily.
First-in first-out (FIFO) and last in first out (LIFO)
There are two popular inventory control methods to manage inventory effectively; first in first out (FIFO) and last in first out (LIFO). In FIFO, as the name suggests, the stock that comes in first is the first to leave the warehouse. It can be very useful to ensure perishable items are not left sitting in the warehouse, and hence minimises wastage.
In LIFO, on the other hand, inventory that was brought in last is the first that is shipped to the customer. This method is used by U.S. businesses to obtain tax advantages during times of inflation (it’s permitted under the U.S. Generally Accepted Accounting Principles (GAAP) but banned under International Financial Reporting Standards (IFRS))
However, it’s not a good option for wholesale businesses operating in the foodservice industry, as it heightens the risk of a stock reaching expiry date, which will result in wastage as well as financial loss. Of course, there are always exceptions, but the LIFO method is rarely used in food and beverage industry.
Store your inventory strategically in the warehouse
You’ve probably heard of how superstores arrange products in a specific way (putting eggs, milk, and other items far away) to maximise the time customers spend in their store so they buy more products. The same concept can also be applied to your warehouse by storing your inventory in warehouse(s).
Optimise your warehouse layout to improve operational efficiency. For instance, placing hot-selling and in-demand products near the loading dock and pushing off-season items further away will reduce picking time and expedite the inventory moving process. Also, it will help minimise unnecessary overheads.
In addition to that, if you’re planning to scale your operations or cater to clients based in different geo-locations, you can store your warehouse inventory in multiple locations. This will help with quicker shipping, improving efficiency, and spreading out risk. Moreover, it can potentially cut down storage costs.
Invest in advanced B2B inventory management software
It’s 2020! If you’re still using outdated software and spreadsheets to manage your inventory, you can’t possibly think of managing your wholesale inventory effectively. You should invest in an advanced B2B order processing and inventory management system to streamline your supply chain and other business operations.
The tools embedded in modern business solutions will enable faster inventory management and improve the overall efficiency of warehouse. Opt for software that can be integrated with your existing I.T. infrastructure to keep the costs associated with the implementation of a new system to a minimum.
Moreover, you will be able to automate recurring tasks using an advanced system which will free up the time of your employees. Not only will this help improve productivity levels, but it will also raise morale and motivation, as employees won’t have to perform the same monotonous activities.
Centralise your sales channels
In today’s digitised world, consumers use different platforms to place orders, including email, phone, fax, online shopping carts, and more. While the availability of various channels facilitates customers, it can be a massive headache for the wholesaler to manage orders coming from different platforms, especially during peak seasons.
Many wholesalers perform reconciliation by manually counting their stock after business hours, which can be extremely time consuming and increases the risk of manual errors. Hence, it’s imperative to centralise sales channels for your wholesale business. This means that all shopping platforms should be connected and synchronised.
Centralising your sales channels will simplify the reconciliation and inventory count process as a single, unified channel will show the total inventory count and transactions. For this purpose, you should choose an order processing software that offers other functions like accounting and payroll, sales and marketing, and more, to create a fully integrated system for your business.
We hope these tips will help you streamline your warehouse operations and manage your supply chain effectively. In the end, it all boils down to how you improve the overall efficiency of your business operations. Having said that, it’s imperative to invest in the latest technology to successfully cater to the influx of orders from retailers and stay ahead of the competition.
If your wholesale business operates in the foodservice industry and is looking to improve your wholesale inventory management effectively, get in touch with OrderTron. Our state-of-the-art order processing software is specifically designed to help wholesalers in the food and beverage industry carry out their business seamlessly without any hassle.
To learn more about our B2B order management solutions, contact us at +61 2 8599 8830 today!