Wholesale inventory management is an important ingredient for any B2B product business that aspires to success and long-term profitability. And for wholesalers who need to manage multiple suppliers, multiple customers, and lots of moving parts, it’s essential.
In this article, we’ll look at the definition of wholesale inventory management and the benefits of accurate stock control in a B2B company.
What is wholesale inventory?
Wholesale inventory refers to the finished products that have been purchased by a wholesale retailer – usually in bulk – from another wholesaler or manufacturer. Wholesalers purchase and resell products in bulk to retailers and other merchants for a discounted cost.
- Learn more: Amazon Wholesaling: A Comprehensive Guide
What is wholesale inventory management?
Wholesale inventory management is the process of ordering, tracking, controlling, and auditing all the various parts, products, and materials needed to run a wholesaling business. This includes core tasks such as purchase order management, stock control, and fulfilment.
Why is managing wholesale inventory important?
With the amount of stock wholesalers buy, sell, and distribute, it’s imperative to keep on top of everything that is going in and out of a warehouse. Technology is constantly evolving and the way wholesalers are managing their businesses is changing too.
With e-commerce playing a large role in ordering product, it’s necessary to have integrated systems to capitalise on this market with the right technology. Using an online order management system can facilitate many of the requirements wholesale businesses need to manage product, fulfil orders quickly, and reduce costs.
10 benefits of optimising your wholesale inventory management
1. Better visibility
Wholesalers often have to move large quantities of various items through their internal inventory system: from when items are delivered from a supplier, to when they are stored in a warehouse, to when they are packed and shipped to the customer.
Given the commonly large-scale operations, errors are bound to occur from time to time.
Having high visibility over inventory is therefore invaluable for these businesses. It is beneficial to have an inventory system that allows managers to know where each order or shipment is, and allows quick responses to customer requests, errors or other adjustments to an order that need to be made.
2. Knowledge of warehouse constraints
Profitable wholesalers know their own warehouse. Given that inventory holdings costs, such as warehouse rent, staffing, ventilation and security costs to name a few, it is critical that a wholesaler gets the most out of the space available.
This means not only filling the given space as effectively as possible, but also strategically placing stock within the space so that frequently ordered items can be accessed more quickly.
3. Speed things up with automation
Wholesale operations become profitable when they are efficient.
Automation is a great way to maximize the efficiency because it cuts down the time needed to make simple decisions, calculations and complete basic processes that would otherwise be done manually.
In recent years, technology has made this much cheaper through the use of barcoding and inventory management software.
4. Form better customer relationships
Customer relationships are vital for any wholesaler.
At the very least, there should be strong lines of communication between wholesaler and customer, whether they are a retailer, distributor, or another type of business.
Generally, the more information that is shared between the wholesaler and the customer, the better the outcome.
For example, if the wholesaler has full knowledge of their customer demand forecasts, they can plan their purchases around this. Also, if the customer is aware of any limitations for the wholesaler in acquiring the stock they need, this will help them with their own planning.
5. Integrate with your other processes
Customer relationships are fundamental, but ideally in today’s competitive marketplace, wholesalers and their customers should have fully integrated inventory management systems. This is now possible through the use of modern inventory management software.
Using this software, an order made by the customer can be processed instantly by the wholesaler. The wholesaler can then automatically inform the customer of an accurate timeframe for delivery, or tell them whether their own desired timeframe is achievable.
6. Make data-driven decisions with reporting and analysis
Another way to maximize inventory efficiency is keeping just the right amount of inventory on hand for your business’ needs.
Holding too much inventory means that you will overpay on holding costs, but holding too little risks shortages, which can damage relationships with your customers. There is no way to be sure exactly sure how much inventory you will need. All you can do is make the best possible estimation.
Detailed analysis of factors such as market demand and customer needs are critical for this, and once again, inventory management software comes up with the goods here. It may be possible to conduct this analysis on a spreadsheet, but inventory management software that collects information from your operations and processes it into useful displays is more accurate, useful, and convenient.
7. Get alerted to any issues
One way inventory management can help wholesalers is through custom alerts, including reorder alerts. This not only takes any guessing out of the process but also means managers don’t have to regularly sit down and look at stock levels when they think it might be time.
Instead, they are alerted to anything when it’s ready, which is a much better use of their time.
8. Count your stock effectively
With the amount of inventory stored, stock counts can be a huge overhead for wholesalers to bear. With inventory management software, and the likes of barcode scanners, you will be able to decrease the amount of manual hours spent counting.
The technology backing up the stock count will also allow for fewer manual errors and greater transparency and oversight of the entire process. As you can appreciate, this is every managers dream.
9. Protect your cash flow
Proper inventory management has a huge beneficial effect on the company’s finances. This is because with acute knowledge of inventory needs, ordering can be optimized creating a streamlined process of inventory in versus inventory out.
The result of this optimization on the bank balance is very pleasing indeed. No longer is money wasted on over-ordering and having stock expire while not being used or sold.
The ability to accurately forecast trends and customer demand can also be positive for the bank balance, as the company then has the ability to lock in good deals with the supplier, take advantage of bulk offers and optimize shipping and therefore reducing handling costs.
10. Develop a reputation for reliability
Wholesalers are in the business of being dependable suppliers. Retailers trust and work with wholesalers to take the risk out of their supply chains. Barring an act of God, retailers expect to be able to place and receive an order in good time.
You cannot sell what you do not have, so it is crucial to manage stock levels to avoid letting your customers down. By implementing comprehensive processes for managing your business’ inventory, you’ll be able to avoid being caught without enough stock on hand.
Reliability gives a wholesaler a competitive edge. Although wholesalers will always compete on price, trust and reliability are also major factors to consider.