Distribution companies face several challenges related to inventory management, some of which include:
- Overstocking: Overstocking can lead to increased storage costs and reduced profitability. It can also result in obsolescence of goods and decreased cash flow.
- Stockouts: Stockouts can result in lost sales, dissatisfied customers, and damage to the company's reputation.
- Excess inventory carrying costs: Inventory carrying costs, such as storage, insurance, and financing costs, can be significant, especially if a company is holding large amounts of slow-moving or obsolete stock.
- Deadstock: Deadstock refers to inventory that has not moved for an extended period of time and is unlikely to sell. This can be a significant cost for distribution companies, as it ties up valuable resources and reduces cash flow.
- Product obsolescence: Technology and market trends can rapidly render products obsolete, making it difficult for companies to dispose of outdated inventory.
- Accurate forecasting: Accurately forecasting demand for products is essential for effective inventory management, but can be challenging, especially in fast-changing markets.
- Inventory visibility: Distribution companies must have real-time visibility into their inventory levels, so they can make informed decisions about what to stock, when to reorder, and how much to order.
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About the Author
Executive sales expert with 30+ years of accounting background and deep understanding of business processes as they relate to lite manufacturing, distribution, specialty retail and hospitality. During this time, I have focused on building “Clients for Life!”
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