Distributors have long played an important role in streamlining the operational lines between manufacturers and end-users. While they have been responsible for the distribution and flow of goods in a seamless manner, the challenges that they face today are no longer limited to delivering intact goods and in-time. They now face modern and unprecedented challenges. With the global marketplace becoming highly competitive, customers demanding faster fulfilment and the ever-evolving omnichannel markets, many of them now struggle for sustenance, let alone profitability.
The advent of technology has led manufacturers and retailers investing in their own distribution networks. With them cutting out the middle man to reach the end customer directly, all the while minimising operational costs has gravely affected the distributors. The increasing competition and the demand for eCommerce operations have led too many distributors to rethink their strategies. Let us discuss some of the most pertinent problems that they face in their channel management operations and viable solutions.
The eCommerce consumers today demand faster fulfilment of their orders. With the majority of the customers demanding two-day or even same-day delivery, distributors are now faced with the tremendous pressure of providing faster fulfilment. If they fail to do so, they will simply look for other options where their demands can be met easily. Faster fulfilment not only helps to expand the customer base, especially those who are time-sensitive but also helps to increase the geographic reach and reduce order expediting fees.
For distributors, in order to stay relevant and maintain their profitability, efficient and quick order fulfilment service is the way to go.
Once the distributor has recognised the demand of the customer for faster fulfilment, the real challenge is to actually provide it. Multi-channel selling software consisting of an OMS (Order Management System) lets you optimise all your orders and their processing on a single unified platform. It helps you lower your order processing costs and time along with letting you maintain an accurate account of all orders. Faster order processing and accuracy in accounting speeds up the fulfilment process significantly.
Another important functionality offered by sophisticated SaaS-based products is the ability to connect with multiple fulfilment companies through a single click to offer an asset-light distribution. This expedites the entire process of order fulfilment. Decreasing the order fulfilment times and increasing the efficiency of the process through the use of such automated systems will save those precious hours, reduce manual intervention and in turn expedite the entire fulfilment process.
Aligning inventory levels with real-time supply and customer demands is paramount to any distributor. Accurate knowledge of inventory movement and keeping tabs on the stock levels for real-time updates is a highly important task. Doing this task physically leaves a huge margin for human error. After all, taking a real-time update of the inflow and outflow and knowing the replenishment levels is an activity that can get out of hand quickly. Any error in the accurately recording these levels can affect the profit margins significantly.
Manual intervention in inventory management can result in discrepancies and inaccuracies that ultimately lead to overstocking or inadequate inventory. A well-managed inventory ensures that customer service targets are always met and avoids overburdening the supply chain with overstocked goods and tight cash flows.
This entire task of inventory management has become even more complex with multi-channel selling becoming the norm. Tracking sales effectively across all these channels so that you can restock your popular products in time is the way to achieve that customer happiness that you have your eye on. For example, consider this, who do you think the customer will choose to buy from:
A seller who has the stock ready to be shipped or a seller who has to stock his products first before shipping, thus causing a further delay in delivery?
Distributors often walk a tightrope while maintaining the delicate balance between excess stocking and stock-outs. Excess stock takes up unnecessary space in the warehouse and ties up the cash flow. On the other hand, inadequate stock can result in consumer dissatisfaction and loss of sales.
Inventory management systems assist you to optimize the process while achieving operational efficiency and maximizing your profits. A multi-channel selling software consisting of an IMS (Inventory Management System) allows you to have real-time updates of all your stock, manage product and batch expiry dates, get analytics and reports about your top-selling products and reduce human error through automation. By providing real-time information about your stocks, you know exactly where a product is and how fast it can get to the customer.
While providing effective sales data that you can utilize to keep adequate inventory, you can also prevent over-stocking, saving inventory holding costs and ultimately improving your bottom- line. These inventory costs comprise the following- warehouse rent, staff wages, financial costs, lighting, heating and security. Maintaining only the required inventory level will help reduce such costs and thus free up constricted cash flows.
An Inventory Management System will also provide the additional benefit of integration with back-office systems such as accounting tools to process all your stock related data. Improved order productivity, increased customer satisfaction along with a significant reduction in human errors and enhanced supply chain visibility are some of the primary benefits that you can derive from a highly optimized inventory management system.
Losses in inventory, decreasing profitability and customer service limitations are some of the biggest concerns that distributors face today. The Distributor mark-up (profit margin) is usually around 20%, however, depending on the industry can range from 5% to 40%. Given the margins, when losses in inventory, slower fulfilment rates and customer service limitations threaten to cut into the profits, distributors are bound to struggle for survival. Today, distributors find themselves in a world of integrated logistics, same-day delivery, and eCommerce fulfilment.
A full suite eWMS (e-Warehouse Management System) is the most powerful tool that a distributor can be armed with. It can empower the distributor by improving the visibility in the supply chain, raising the inventory accuracy, reducing labour costs and augmenting the flexibility and responsiveness towards the customer. Tracking the flow of the system in an efficient manner is the need of the hour.
A warehouse management system restricts the movement of the inventory, thereby enhancing the authenticity of the reports and reducing the requirement of buffer stock that ties up the capital. It also improves the efficiency of space allocation in a warehouse. An eWMS can also exactly pinpoint the location of products in relation to receiving, packaging, and shipping areas, thereby increasing productivity. It also increases the transparency in operations by auto-syncing the orders received and inventory with the seller’s marketplace account.
This helps in achieving a clear understanding of the orders received, processed and the inventory available, thereby avoiding any discrepancies.
Today’s highly competitive world of distributors selling for multiple brands across various channels is full of challenges like inefficient management of supply chains, inadequate information and significant control over the credit line. Managing multiple brands across multiple sales channels/marketplaces is no easy feat. It requires accurate inventory records, effective order management, invoice generation and a perfectly managed warehouse. Achieving all this for all these different marketplaces is not an impossible task, albeit it is a complex one.
A multi-channel selling software lets you access all this information and more through a single unified platform. Offering a seamless integration of all your field sales, inventory management, logistics, invoicing and payments, it ensures that all your sales representatives are armed with precise information at the stroke of a mouse. This becomes especially important when you want to scale your business.
With increasing demands from customers and retailers and manufacturers asking for more at reduced costs, distributors today find themselves under tremendous pressure to survive and stay relevant. As they face the struggle to stay afloat, adopting cutting edge technology that offers them relevant solutions in a few clicks of a mouse will help them thrive not just survive.