The delicate balance of stock and service


Data as the accelerator for a smart stock strategy

Keeping inventory costs as low as possible while offering customers a perfect service: that is the challenge faced by wholesalers every day. A smart stocking strategy is the solution. The key issue here is not so much which products to stock, or not to stock, as how to get the orders to your customers, and where and when they want them.

In a previous blog, we have already discussed how modern wholesalers need to make the switch towards even greater customer focus. It’s no longer enough to think about inventory costs and how to keep them as low as possible. That is your problem, after all, not the customer’s. What the customer wants to know is if they can receive the order on their own terms, i.e. where and when they want it. The storage location of a product, whether it’s with you or somewhere else, is of minor importance.

Data streams: the bread and butter of wholesale business

The key to success – balancing minimum inventory costs with maximum service – lies in the data: constant data streams are the bread and butter of the modern wholesale business. Rapidly advancing digital technology has radically altered the playing field. It enables us to integrate systems – and therefore data – and to get valuable insights and find patterns in it.

In broad terms, we have outlined three types of data:
  • Internal data such as sales figures, on which traditional forecasting is based. While this data is not new, what is new is the availability of AI-based “intelligence tools” which help to forecast more accurately. For example, thanks to AI technology, the diverse characteristics of new customers can be matched to those of existing customers, enabling better forecasting of the new customers’ purchasing behaviour.
  • Data based on environmental factors, such as economic circumstances, weather conditions or even trends. Has a heatwave been forecast? If so, the demand for fresh salads is guaranteed to go through the roof. Have certain colours or colour combinations suddenly come in fashion? If so, a paint wholesaler can take advantage of this.
  • Data from the chain. For wholesalers, it is useful to get down as deep as possible inside the chain. This means knowing not just what the customer is buying, and when, but also how fast that customer is selling product on to his customers. Being able to access this data is invaluable in helping you forecast correctly, and it also drastically reduces the chance of the notorious bullwhip effect. Business models such as Vendor Managed Inventory capitalize on this.

Collecting and collating these various types of data can result in a smarter stocking strategy – and the apparent conflict between cost and service can be eliminated. Brought together, internal data, environmental factors and data from the chain can result in discovering insights and patterns that enable wholesalers to forecast more correctly and proactively serve their customers’ needs.

Dynamics 365: the key to a smart stocking strategy

Do you want to keep inventory costs as low as possible while still catering perfectly to your customers’ needs? With Microsoft Dynamics 365 for Wholesale & Distribution, you can do just that.

The solution enables you to:
  • link data from different sources and gain valuable insights
  • make even more accurate forecasts, thanks to Artificial Intelligence tools
  • support business models such as VMI

Want to know more? Send us a message through the contact  form. We will contact you, with no obligation, and will be happy to tell you more and answer any questions you may have.



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