How Can Distributors Improve Inventory Management With The Right Software?

Distributors looking to improve inventory management with inventory optimization software should turn to an experienced business partner.

An article on the DC Velocity website quotes Shaun Snapp, an expert on inventory optimization, who says most companies are not reaping the benefits of the software. Inventory optimization software started became increasingly common starting in 2006 as companies sought a better way to approach inventory management.

The industry clearly recognizes the value of the software and in better inventory management. It was the No. 2 “to buy” product in a November 2012 DC Velocity survey. But many aren’t using it to its full potential, Snapp says.

Many organizations are missing the boat because they don’t understand how inventory optimization works and they don’t have the right people to implement the software. The value in improving inventory management is that it reduces purchase costs and storage costs, allowing distributors to keep inventory low and still satisfy demand.

The key is to hire a consulting firm that’s experienced in the distribution industry and understands the software. The right business partner can provide the education and training necessary to make inventory optimization software work for any distribution business.

According to Snapp, some software vendors might be failing to educate customers about their product. As a result, customers may be skeptical of the stocking levels recommended by the software. If the recommendations aren’t in line with the company’s past experiences, executives who don’t trust the software will stock based on past experiences.

There’s a common mistake of continuing to see warehouses along the supply chain as islands, Snapp believes. “When you use this software, one location is making its decision on stocking based on what another location is doing,” he explains.

Additionally, companies disappointed with their inventory optimization software may actually be holding themselves back. “Implementing inventory optimization is more complicated than most people think,” Snapp says. “It needs to be put in better, and people need to become better educated on how to use it.”

Source: DC Velocity, June 2013