B2B Inventory Management [Ultimate Guide]

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Due to the high volume (and often, high value) of B2B customer orders, inventory management presents several unique challenges for manufacturers and wholesalers.

This B2B inventory management guide breaks down those challenges and outlines the core benefits and key features to look for in reliable B2B software.

What is B2B inventory?

B2B inventory, or business-to-business inventory, is physical stock sold by one business to another.

The manufacturing industry is one example that specialises in the production and sale of B2B inventory. Manufacturers produce goods that are then sold to other manufacturers, suppliers, or wholesalers. Wholesalers purchase B2B inventory, usually in bulk, from a distributor or manufacturer to resell to retail stores and consumers.

Unlike B2C (business-to-consumer) inventory, B2B inventory is often purchased in high volumes in a bid to lower production, fulfilment and freight costs.

What is B2B inventory management?

B2B inventory management is an umbrella term that covers all the small and large processes of procuring, manufacturing, and storing products for resale to other businesses.

B2B customers expect accurate, reliable, and timely order fulfilment. They rely on their B2B inventory supplier to meet those expectations and keep the shelves stocked with products. The goal of B2B inventory management is to ensure stock accuracy, minimise time and money waste, and maximise efficiency across a B2B product company.

B2B inventory being managed in a warehouse

A key component of B2B inventory management is the improved accuracy of stock levels across the business.

Challenges of B2B inventory management

With the dynamic shift toward multi-channel businesses and an increase of B2B companies within this space, the challenges of managing B2B inventory have become increasingly complex.

Let’s take a quick look at some of the biggest B2B inventory management challenges you’re likely to encounter.

1. Higher volume orders

B2B inventory management involves the fast and reliable fulfilment of large-sized and bulk orders.  These larger order sizes present unique fulfilment challenges – particularly around picking, packing, and logistic; higher order volumes can slow down order fulfilment activities and create shipping delays.

Implementing the right technology will help you meet B2B client expectations by improving high-volume order fulfilment and delivery times.

You can streamline fulfilment activities by automating many manual fulfilment activities. Integrated warehouse inventory software solutions like barcode scanners improve picking tasks, and robotics rapidly deliver picked items to a packing area to be packed and dispatched.

2. Higher-value products

B2B relationships typically deal with higher-value products that focus on quality and performance. Customers may have different order requirements and specifically negotiated arrangements which are difficult to maintain.

Multifaceted sales cycles and limited visibility into order processing also make it difficult to prioritise high-value B2B orders. You can better personalise your B2B customer shopping experience by assigning customer catalogues to certain client segments so that, when they log in, they only see what is relevant to them.

B2B buyers increasingly prefer to go through most of the purchasing process on their own.  To accommodate this trend, implement self-service options so that your customers can find as much information as possible. You can also utilise integrated B2B inventory management tools for high-value products with standardised platforms.

3. Cash flow

Cash flow is essential for the longevity and successful operation of any business. B2B payments are a critical part of cash flow management.

B2B sales often have payment terms of 30–90 days, so cash flow is held in accounts receivables. If there is a delay in the payment of receivables, cash flow problems can escalate quickly. This can lead to challenges in your ability to pay suppliers, payroll issues, and other financial problems.

Cash flow management tools can help you to increase your cash flow while saving you time.

For example, some software automatically generates invoices and allows you to reduce debtor days by establishing payment arrangements that make it easier for your customers to pay you.

b2b inventory management software male user wearing orange shirt

B2B inventory management software can help improve cash flow by reducing the amount of stock on hand to its optimal levels.

4. Credit lines

Credit lines underpin the relationships you have with B2B suppliers and customers and have a major impact on your cash flow.

B2B credit management oversees accounts receivables activities to ensure you stay in control of trade credit. Credit lines are discussed and negotiated with new customers and suppliers and may include detailed credit policies.

When extending lines of credit to B2B customers, it’s important to undertake appropriate credit checks and have a strategy that ensures the receivables remain within acceptable levels. Put processes in place to follow up with defaulters and manage the collection of late payments.

If you have lines of credit with B2B suppliers, you can build your reputation and credibility by consistently settling your payments on time. Other benefits of working with lines of credit are that it can increase short-term cash flow and improve your business’ credit score.

5. Managing inventory risk

Inventory risk is the likelihood a B2B company is unable to sell its goods or that its inventory will decrease in value. Many manufacturers, wholesalers and retailers hold large amounts of stock which makes managing inventory risk a frequent challenge.

Inventory risks include such things as:

  • Inaccurate forecasting
  • Unreliable suppliers
  • Theft
  • Loss
  • Damage
  • Obsolescence

Inventory software can help B2B organisations mitigate inventory risk by optimising forecasting accuracy and providing real-time inventory and sales data.

6. Preventing returns

Returns are inevitable and expensive. In B2B, the first challenge is reducing the overall volume of returns. The second is to streamline the returns process for your customers.

One way to minimise returns is to optimise your pre-purchase process with an augmented ecommerce platform. Distinct product presentation with sharp imagery and product descriptions can ensure your B2B clients are clear on the product’s functions before they place an order.

Automation will also help to improve your returns process. Customers are more likely to continue making purchases from a business that has a fast, free, and painless returns process.

Automating your returns process enables you to prefill return labels, quickly manage refunds or credits, and provide tracking details to your customers as their order travels through the supply chain.

B2B inventory being managed and shipped overseas in freight containers

Returns can be extra costly in the B2B world, making them a serious challenge when planning your inventory management strategy.

5 benefits of B2B inventory management software

B2B inventory management software allows you to create new orders, update existing orders, and process payments quickly and efficiently.

Below are a few of the primary benefits of inventory management software in the B2B sector.

1. Fewer manual tasks

B2B inventory software automates many manual fulfilment activities and can process large orders at the line level.

Extensive sourcing rules support order prioritisation, product substitution scenarios, and customer-level needs. This provides greater flexibility around splitting orders and managing different workflows on a single order.

2. Consolidated sales data

B2B software solutions consolidate your sales data from multiple channels, allowing you to track your inventory and orders in a single platform.

Consolidated inventory and sales data provides the level of flexibility needed to source and allocate B2B orders more proficiently across your network.

3. Real-time inventory visibility

B2B inventory management software updates stock changes instantly, for all users.

A single view of all your inventory – in real-time and across all locations – allows you to accurately manage omnichannel B2B inventory, including in-transit inventory.

Real-time visibility, optimal reorder levels, and stock alert functions inform the best time to purchase new inventory without losing sales or overstocking.

4. On-time delivery

B2B customers have high expectations for on-time order delivery. Failure to meet expectations will negatively impact your reputation and B2B customer relationships.

Most B2B relationships have a Service Level Agreement in place that holds the supplier accountable to pre-determined lead and delivery times with penalties for orders that are not received on time.

With B2B inventory management software, you can readily pull together a multi-enterprise, holistic view of your inventory. This gives you the confidence to deliver on your promises and to meet your customers’ on-time-delivery expectations.

5. Scalability to grow your business

B2B inventory management software also offers the flexibility to grow with your business.

Scalability means it adapts to changing strategies and organisational growth. When faced with unusual seasonal fluctuations or unexpected spikes in demand, inventory software handles automation, inventory variability, and on-time order delivery processes.

B2B inventory of steel kegs

B2B inventory management software should have the capacity to scale alongside your business through add-ons and integrations.

Key features to look for in B2B inventory management software

Look for B2B inventory management software that’s versatile, flexible, and integrates easily with other technology. Most vendors will provide free trials and customer support to ensure you’re getting the product that is right for your business.

Here are a few more B2B inventory management software features to look for.

Easy-to-use interface

An easy-to-use interface minimises time spent navigating the software to achieve results.

The software interface should minimise search time and allow you to fulfil your needs quickly and efficiently with minimal training, support, or documentation.

Your chosen platform should have the ability to execute fast inventory monitoring and control, along with automated features for eliminating manual processes. Administrators should also be able to easily add software integrations and modules to scale the system as you grow.

Real-time visibility

B2B inventory management software should provide a reliable, secure database with real-time data and inventory visibility across all channels.

This gives you the flexibility to optimise your business operations, enhance the shopping experience of your customers, and prevent overselling that leads to inventory stockouts.

Real-time visibility helps you track and record:

  • Seasonal fluctuations
  • Supplier lead times
  • Demand across product ranges
  • Changes to order volumes

This functionality gives you the confidence to know exactly what products you have in stock and their quantities, and view the status of any order to learn which actions should be taken next.

Purchase and supplier management

A good B2B inventory management system allows you to gain control of your purchasing activities and improve overall business efficiency.

Inventory software can generate and autofill purchase orders, centrally store all your supplier information, and allow you to view the transaction history of all of your suppliers.

In addition, purchase and supplier functionality enables you to dynamically generate volume discounts offered by your suppliers for simplified purchasing.

Dress shirt inventory in a B2B business

Businesses should look for B2B inventory management software that can perform or automate all of their current and future inventory tasks.

Inventory control

Inventory control is a fundamental part of B2B inventory management. Software that enables you to categorise products by type, location, and SKU is essential for efficient inventory management.

B2B inventory software should include inventory control features such as:

  • Automated reports
  • Inventory alerts
  • Demand forecasting
  • Materials planning
  • Supplier management
  • Shipping management

A B2B business can establish accurate reorder points and automated notifications when inventory levels reach the established reorder point. Effective software will reduce your inventory investment and minimise handling costs without adversely impacting the satisfaction of your B2B customers.

Inventory tracking

Accurate inventory tracking is essential for B2B companies, as it helps you identify which products and quantities of stock to order and when to order them.

Software that tracks inventory from purchase to the sale of goods can also help you respond to market trends by ensuring you have enough stock to fill your customer orders.

Tracking allows you to monitor the status of products within your supply chain, automatically generating tracking numbers when an invoice or receipt is generated. This enables the customer to track the status of their order from the time it was placed.

Barcoding and digital labelling

Barcoding software helps to automate business functions and eliminate human error in manual data entry. Digital labelling helps to simplify the collection, storage, and retrieval of inventory.

Once a product or component has been assigned a unique serial number you can track the item from its point of origin, right through the entire supply chain to your customer or the end user.

Cloud infrastructure

Cloud-based systems are agile enough to scale up inventory operations without disrupting your workflows.

Cloud technology comes with automated backups, secure access, real-time collaboration, and mobile applications that communicate across multiple locations.

Timely upgrades are performed remotely by your service provider, so you aren’t paying for ongoing software and security updates.

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Oliver Munro - Unleashed Software
Oliver Munro

Article by Oliver Munro in collaboration with our team of specialists. Oliver's background is in inventory management and content marketing. He's visited over 50 countries, lived aboard a circus ship, and once completed a Sudoku in under 3 minutes (allegedly).

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