Wholesale executives cite volatility of demand and understanding complex customer demand patterns as the top challenges for 2019, according to a report published by Blue Ridge Solutions, Atlanta.
The “2019 State of Wholesale Distribution Supply Chain Report,” is sponsored by the National Association of Wholesalers (NAW), Washington, D.C., and interviewed 156 wholesale suppliers commenting on the challenges they’re facing in 2019.
Additional key findings include:
- The challenge of managing slow or low-selling items remains one of the biggest pain points for wholesale suppliers. Many don’t have systems in place that are able to handle analyzing the data needed to make improvements.
- The industry continues to lag behind others in adopting new approaches to managing data and other information, such as machine learning.
- Despite having inventory turns and profit as top metrics, many in the industry continue to struggle with improving these.
- Current solutions and tools aren’t helping wholesale suppliers achieve these goals.
- In order to improve service, wholesalers need to focus on holding the right inventory per product and using advanced modeling techniques, such as economically optimized replenishment cycle, cost of service analysis and safety stock modeling.
- In order to make better inventory and service decisions, many wholesale suppliers need to leverage additional information that influences demand into their forecasting process, yet many remain slow to adopt advanced forecasting and data analysis techniques, such as machine learning.
- Often wholesalers misunderstand customers and don’t have the tools implemented to solve these problems. Pain points in reaching business goals were managing slow moving (66%) and seasonal (45%) items as well as forecasting product lifecycles (39%).
- More than 60% of wholesalers have more than one month of inventory on-hand, indicating the strategy is to stockpile products. This also signals that many in the industry continue to rely on gut feelings about stocking levels instead of using more sophisticated demand forecasting tools.
- Despite having more products in stock, customer service levels have dropped since 2018. More often than last year, wholesalers missed sales due to being out of stock. In 2019, those who had missed sales of more than 4% climbed to nearly 27% from 19% in 2018.
The survey concludes that “the industry is continuing to experience challenges, many of which could be mitigated by embracing technology and advanced forecasting techniques, particularly when it comes to inventory management.”