Every wholesale distribution business knows the importance of proper inventory management. Your company’s ability to efficiently buy and sell product is what dictates success. This becomes even more important as wholesale distribution businesses begin to sell through multiple sales channels including eCommerce. In order to properly manage your inventory, most wholesale distribution businesses turn to fully integrated ERP software. ERP software is designed to manage all aspects of a company’s operations including:
- Inventory management
- Order entry and processing
- Contact management and CRM
- Warehouse management
- eCommerce integration and more
From an inventory management standpoint, proper ERP software will include functionality for picking, packing and shipping, receiving, replenishment and purchase orders, as well as more sophisticated inventory management tools such as landed cost tracking and lot tracking. However, depending on the size of your business, sometimes managing inventory is not enough. This is where advanced inventory forecasting and replenishment software comes into play. These more sophisticated systems act as add-on solutions for more in-depth analysis of your company’s inventory. They aid in demand forecasting, seasonality analysis to automatically find and assign a seasonal profile to each item/location record, multi-location planning, promotion management and more.
Blue Link recently spoke with Mark Grimes, VP Global Sales and Channel Partner of EazyStock, an advanced inventory forecasting and replenishment software, to learn more about the industry and how businesses can better manage their inventory.
Samantha Hornby: "Mark, tell the readers a little about yourself. Who are you and where are you from?"
Mark Grimes: "My career spans over 20 years in software manufacturing and distribution. I started out in Dallas, Texas with an ERP company that was expanding globally. With that company, I moved to China and climbed the ranks in the sales organization till I eventually became the Managing Director for China. After 17 years I decided to move back to the USA. That’s when I joined EazyStock. I’ve been married for 16 years and have 11 year old twins (boy and girl). When not spending time with family I enjoy golf and fast cars. As a family we do monthly volunteer activities with Feed My Starving Children. I believe teaching children it’s important to give back."
Hornby: "Give us a little background on how EazyStock came to be and how it ties in with other systems being used by businesses."
Grimes: "EazyStock is a division of Syncron. Syncron has been helping large corporations optimize inventory for over 15 years. EazyStock developed from the idea that not only large corporations but also small to mid-size companies had issues optimizing inventory and could benefit from the same system as the big corporations."
"Most distributors and wholesalers are seeking more from their ERP when it comes to optimization. With EazyStock, businesses don’t have to evaluate changing their ERP system anymore, which is a major undertaking financially and ties up a tremendous amount of resources. Inventory optimization software can be easily integrated into already established business operations to drive down costs and increase serviceability. It is a win/win for both ERP platforms and the end users."
Hornby: "What have you noticed is the main thing most wholesale distributors get wrong when it comes to managing their inventory?"
Grimes: "Thinking that their ERP system is handling everything. Most distributors set static inventory procurement points that cannot handle the ever-changing replenishment requirements of their customers or market. Distributors are often blindsided by painful over ordering or costly stock out situations, which can hurt sales and customer retention. If not managed well, or as I like to say, “optimized” properly, these practices will eat away at a company’s profits and overall inventory performance."
Hornby: "In your opinion, what is the biggest challenge facing wholesalers and distributors today with regards to inventory management?"
Grimes: "The biggest challenge we see today in the world of distribution is accurately balancing inventory levels with customer service demands. In today’s environment, if you don’t have the product in stock when the customer wants it, they will go somewhere else and order from someone who has it readily available. In the past customers would accept back orders but that is not always the case today."
"Distribution businesses need to keep inventory low to maximize profit margins, but they need intelligent systems to help avoid running out of high demand items. It is a difficult task for most distribution businesses to manage. Often times, these types of calculations are managed in Excel or done through manual calculation methods, but it is too costly and too risky for distribution businesses to not invest in more automated inventory management tools."
Hornby: "You’ve touched on the answer a bit, but how can they overcome these challenges and optimize their inventory? Where does technology come into play in helping address these challenges?"
Grimes: "Distributors can leverage technology to eliminate the human error and give 100% accuracy to the inventory status at any given point in time. Inventory optimization software, such as EazyStock, further analyzes ERP data to give distributors the ability to more accurately forecast every SKU in real time. This results in inventory being in stock at the right level and at the right time."
"By onboarding the right technology to support the ERP platform, businesses can lower inventory levels, drive up inventory availability for critical items, and eliminate wasteful labor costs along the way. The real challenge is getting the organization and employees on board to see how systematic change can drastically impact the business’ success. Most leaders in management, finance and operations will struggle to get the whole team on board because innovative changes “are not the way we’ve always done things.” Investing in the technology is important but getting the organization to buy into the vision is critical."
Hornby: "Where do you see the distribution industry going in the future, and how do you think this will affect how businesses manage their inventory?"
Grimes: "There are over 330,000 wholesale distribution companies in North America. According to the Frantz Group, the US wholesale distribution industry is forecasted to grow at an annual compounded rate of 5 percent. With numbers like this, it’s imperative that the wholesale distributor stay competitive. Margins tend to be razor thin in distribution, so competitive companies will need to figure out ways to do things faster and more accurately to keep their customers coming back."
"Additionally, Gartner released a report that the fastest growing companies are not the ones with the cheapest prices but the ones who are the easiest to do business with. Distributors need to innovate and invest into systems that keep their profits strong and their customers happy. To do that, distributors in almost every industry vertical will need to look to advanced systems that will help them better manage and optimize inventory across their sometimes very complex supply chain networks."
Hornby: "If you were to give one piece of advice to distributors today regarding inventory management, what would that advice be?"
Grimes: "Decide if your inventory is an asset or a liability. Then take the appropriate action to turn it into an asset for your business."
Mark is a seasoned enterprise software technocrat with a 20-year track record as a successful VP of Business Development, Managing Director, and Global Accounts Director in the manufacturing and distribution space. Mark’s focus is to deliver consistent, profitable growth to the customer’s bottom line. Mark leads with a passion to define and drive a clear inventory optimization vision through the use of software technology. He takes a leadership role in executing and maximizing the best possible value for the client.