Wholesaler's profit margin is the difference between the selling and purchase prices. Therefore, many believes that the goods purchased as cheap as possible will earn more money selling it. Many wholesalers/distributors thinks and behaves in that way, they order large batches of goods with impressive discount.
However, dealers are also aware that lack goods (inventory) means lost sales. They keep ordering large batches, because only then can receive substantial discounts from suppliers.However, customers with different needs grows stock of goods, freeze working funds, driven distributor to despair and leads to the clearance sale.
Usually dealers solve the situation in the following ways:
- improve forecasting (what customers will buy wthat kind of goods);
- orders only marketable goods in large batches;
- refuse of unsaleable goods.
The biggest problems of inventory management associates with ill effects of inventory management: inventory shortage or surplus. In the latter case, a large quantity of stock to reduce any company's competitiveness, there is a depreciation of the goods, the physical and moral wear and tear, ultimately the product expiry and cancellation.
However, much more painful consequences arising from the lack of trade. Many companies claim does not lose sales, but experience shows that the loss of sales of goods for the lack of storage on average ranges from 10 to 20 percent of all company sales.
How to increase sales by ensuring that you have top-selling goods at the right time, while reducing inventory and without increasing operating expenses?
Wholesale business is very simple: it must be what customers are buying and not what you buy. However, often happens in the other way: as a deliberate lack of those goods which are in demand, and still remains a lot of products that nobody wants to buy.
Many distributors are confronted with a typical problems of supply chain and inventory management:
- Too many lost sales (10% -20%) to the end customer / user.
- Regional stores often run out of certain products, while others are more than they should.
- Significant capital share (30-40%) are "frozen" in slow-moving items.
- There are too many unforeseen urgent referral among the stores.
- Too often to the regional warehouse or to customers shipped products that does not meet the actual user needs.
- Excessive quantities of the goods return.
- Manufacturer often do not have enough capacity for all the orders are met;
- Sent not fully completed orders, etc.
As the result, the company's profitability decrease, deteriorates the return on invested capital, deteriorates cash flow.
Would you like to find out how your company could: dramatically reduce the disadvantages of marketable goods, thereby reducing inventory and improving their negotiable; reduce the loss of moral and physical outdated goods, don’t lose sales and release of the working funds?
Let’s meet and talk, perhaps together we can achieve results faster?
During the meeting Nerius Jasinavičius, the head of the business consulting company “TOC Sprendimai” will present how to improve your inventory turns and return on invested capital to increase company sales and the release of working capital funds.
