Implement a Inventory Management System
You want real-time information on where your inventory is. You also want a single source of truth. Trying to discern conflicting numbers from different systems is enough to make any warehouse manager’s head spin.
A robust inventory management system (IMS) delivers warehouse managers with accurate, real-time data. A good IMS will help your wholesale warehousing business with critical tasks like:
- Manage multiple units of measure. This is especially useful when serving international customers.
- Manage serialized items. If you deal in high-value wholesale products, particularly those that offer warranties, you may need to track them at the unit level, even if they’re sold in bulk.
- Understand reorder points. Many businesses set a “reorder” point--when stock reduces to a specific number, they put in a new order to ensure they’ll have incoming goods before the inventory runs out. With a good IMS, you can set up a system that automatically triggers a new order when your inventory hits the reorder point.
- Barcode or RFID scanning. Many IMSs allow you to download an app to a mobile phone and use it as a barcode scanner. This is a cost-effective way to turn a device that most workers know how to use - a smartphone - and into a tool that facilitates inventory management. As your business grows, you may consider introducing an RFID scanner. Having an IMS that supports this is a good way to think ahead.
- Easy integration into other ERP systems. You may have a larger enterprise resource planning (ERP) system or standalone systems like a warehouse management system (WMS). Connecting your IMS to other ERP systems streamlines workflows, maintains the accuracy of your data, and leads to efficiencies that generate cost savings.
- Lot tracking capabilities. In some wholesale businesses, like food and beverage businesses, it’s important to know which raw materials or semi-finished materials were used for finished products.
Finally, don’t rely exclusively on your accounting system to keep track of your inventory. Inventory tracking for accounting purposes and inventory tracking for operational purposes serve two different functions.
Use a Safety Stock Formula to Avoid Stockouts
Forecasting demand is tricky for wholesalers. Get it wrong and you’re either looking at way too much product (excess inventory) or an unnecessary dry spell while your competitors meet your customers’ demand (stock out). And, since you’re dealing in such large quantities, a big mess up can leave your business in serious financial jeopardy.
Business owners often rely purely on gut feeling to determine when they should order more products. This is a mistake. Instead, wholesale distributors should use a data-driven safety stock formula to determine when to replenish their inventory.
If you have inventory specialists on staff, they should be able to analyze your inventory data and pick the best safety stock formula for your business.