INVENTORY MANAGEMENT SOLUTION - THAT SCALES WITH YOUR BUSINESS - Australia Hong Kong - Introv
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HOW TO PICK AN
INVENTORY
MANAGEMENT
SOLUTION
THAT SCALES WITH
YOUR BUSINESS
Australia Hong Kong India Singapore
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Read Time: 8 minutes
HOW TO PICK AN
INVENTORY MANAGEMENT
SOLUTION THAT SCALES
WITH YOUR BUSINESS
Introduction invest in the right solutions that not only
With the right inventory management solution meet their current needs, but that can also
in place, distributors can flex and adapt quickly flex and adapt quickly to the needs of an
regardless of market conditions, challenges expanding organisation.
or changing business models.
For any wholesale distributor that’s operating in
During the startup phase, distributors focus today’s fast-paced, ecommerce-oriented selling
on launching their businesses, building market environment, inventory management is one
share and creating sustainable business area where “scale” truly counts. For example,
models. Setting up shop, establishing physical a growing company may make any (or all) of
or virtual locations, staffing up, choosing these moves in an attempt to grow revenues
product lines, and finding customers are all top and market share:
of mind during this stage, and rightfully so.
• Expanding into new geographies (e.g.,
But once those “early stage” challenges are through acquisitions).
behind them, distributors have to think about
• Overhauling its ecommerce approach to
scaling up, strategically expanding their
sell more online.
markets, increasing sales and building their
customer bases to the point of profitability • Taking on new product lines and supplier
(and beyond). partners.
To support this mission, software solutions • Creating stronger alignments with suppliers
must adequately scale with their users. To and/or customers.
make sure this happens, companies must
© Oracle | Terms of Use and Privacy Page 2
• Developing a “leaner” inventory approach coming up with good management strategies
(i.e., one that reduces inventory levels while that satisfy customer demands while also
minimising stock-outs). reducing (or eliminating completely):
• Finding new ways to drive costs out of the • High inventory costs
distribution process.
• Uncertainty due to fluctuations in demand
Achieving these and other growth goals can be
• Risk of loss
easier and less costly with technology, but only
if that technology is flexible, scalable, adaptable • Stock-outs
and cloud-based. By helping distributors
minimise manual work and streamline their • Inventory turnover rates
operations, for example, a scalable inventory • Unnecessary order duplications
management solution can reduce costs,
improve efficiencies and simplify even the most • High levels of working capital tied up in
dynamic istribution environments. inventory
In this white paper, we explore how scalable • Excessive storage costs
technology helps distributors solve their biggest • Imbalanced shipment lead times
pain points, show how to pick a solution that will
scale up as distributors grow and hear how one • Lost customers
company successfully transformed its inventory • Loss of materials due to carelessness
management approach with a scalable, or pilferage
cloud-based solution.
Combined, these problems can add up to
Easing Distributor Pain Points with a Scalable substantial financial losses—all of which can
Inventory Management System be avoided or mitigated by using a scalable
Achieving optimal inventory levels is a inventory management platform that enables
delicate balance. Buy too little and you wind high levels of inventory visibility on a real-
up with stock-outs and unhappy customers; time basis.
procure too much and your carrying costs
and obsolete inventory levels go up. Intent on Inventory management includes product
running leaner operations that aren’t saddled ordering, storage and control. It’s about having
down with excess inventory or plagued the right products in the right quantities in the
by wasteful processes, more distributors right place and at the right time—and all at the
are examining their inventory turnover and right cost. By governing non-capitalised assets
© Oracle | Terms of Use and Privacy Page 3and monitoring the movement of products from wind up saddled with “dead stock” in its
distributor to end user, inventory management warehouse, DC or retail store. This dead
requires detailed recordkeeping for every stock consumes working capital and uses
stocked product. up physical space all while sitting still. The
products in question may also be on the
Good Inventory Management: From Point
brink of obsolescence, rendering them
of Origin to End User
unreturnable and useless in the near future.
A critical aspect of supply chain management,
good inventory management extends from the • When you don’t hold enough inventory
point of origin (e.g., the manufacturing plant in stock, you risk running out right when
or distribution centre) to the end user. Left up customers ask for the goods. Maybe the
to chance, it can either tie up cash and hurt current tariff situation has you jittery about
organisational profits, or it can save companies foreign supply sources, or maybe your
money while also improving their profits and firm’s new ecommerce site is creating new,
bottom lines. unprecedented demand levels for certain
items. Whatever the culprit, you now have a
Consider these two scenarios:
stable of unhappy customers to contend with.
• When you overstock in anticipation
In the past, companies tried to avoid these
of future demand, your company may
problems by performing physical counts out
© Oracle | Terms of Use and Privacy Page 4“A scalable, cloud-based solution will handle only the functions
and provide the capabilities that the distributor wants—and that it
actually uses. Then, when your distributorship grows to the point
where it needs more functions, the solution can easily be ‘scaled
up’ to accommodate that growth—and future growth as well.”
Michelle Davidson, Wholesale Distribution Industry Principal, Oracle NetSuite
in the warehouse and then reconciling those Not always seen as a requirement during the
counts with paper- or batch-based systems. software selection phase, scalability allows
This task took place on a scheduled basis your inventory management solution to grow,
(e.g., at the end of a set period, such as a change and morph along with your company.
month or a quarter), with the result being
Scalable software platforms provide myriad
updated inventory figures.
benefits. A distributor that’s just starting out,
Today’s inventory management processes moving into a new market or taking on a
incorporate advanced technology. Scalable new product line, for example, should select
inventory management software, for example, a scalable inventory management solution
enables real-time updates of inventory counts that provides only what the company needs
on a regular basis. When this process takes at the time. That translates into lower upfront
place in the Cloud, the information can be investment and less user training—both of
readily shared with all users and stakeholders which are attractive “wins” for companies in
across multiple business units and locations. the startup phase.
What is a Scalable Software Platform? As the distributorship starts to grow, however,
In the business world, the word “scale” means its inventory management solution has
to grow or expand in a proportional and usually to mature right along with it. An electrical
profitable way. It’s also used as a noun that distributor that starts out with 200 SKUs and 10
translates into proportional growth especially electrical contractor customers, for example,
of production or profit and/or a large market but then expands to 2,000 SKUs and 100
position.”1 Specifically in the software realm, customers within two years, needs a solution
a scalable system is one that doesn’t have to that can scale up without any major redesigns
be redesigned in order to maintain high levels or interruptions.
of performance when workloads increase.
By preparing for future expansion while
Those increases could be driven by more keeping complexities to a minimum, scalable
users on the system, the need for higher platforms leave the door open for changing
storage capacity, an increase in transaction requirements while helping distributors adapt
levels or pretty much any other event that to their own changing business environments
forces the solution past its original capabilities. (and all without a high upfront investment in
1
Merriam Webster, What Does ‘Scale the Business’ Mean?
© Oracle | Terms of Use and Privacy Page 5technology). Because the software was literally either overstocked or understocked positions;
designed to grow along with the company, and dealing with inventory counts that don’t
distributors can continue to leverage the same align with what’s really on the storeroom
software for a longer period of time. Combined, shelves, then it’s probably already losing
these benefits help companies protect their money and customers. Other telltale signs that
investments and get the most out of them. an inventory management system isn’t working
anymore include:
Is Your Software Really Configured
for Scalability? • Complicated, time-consuming inventory
At some point, every distributorship reconciliation processes.
experiences the kind of growth that outstrips
• Overstocking to ensure that the right amount
its technology. Maybe that software was
of product is on-hand when needed.
developed decades ago, or maybe it’s just
maxed out and unable to scale up any further. • Constantly having to manually change
It could have been developed on older physical counts to reflect actual in-
architectures and because of this, it can’t stock positions.
integrate with other systems and solutions.
Or maybe a distributor wants all of the bells • Mismanaged inventory levels.
and whistles (e.g., dashboards, application • High levels of human error (i.e., due to
programming interfaces (APIs), mobile manual data entry processes).
capabilities, etc.) that modern, cloud-based
software platforms have to offer. • Inability to handle an increased number
of stock keeping units (SKUs) as your
The problem is that in today’s competitive distributorship grows.
business environment, distributors can’t
afford to spend time and money on manual • No metrics to leverage to confidently
inventory management processes—nor optimise inventory.
can they afford to work with solutions that • Too much obsolete inventory in the
don’t adjust to their current (and future) warehouse or distribution centre (DC).
technology needs. No longer relegated
to using proprietary, on-premise systems • Poor demand forecasting.
that offer low levels of flexibility, today’s • The list goes on…
leading companies are leveraging cloud-
based platforms with capabilities that can be For a company in growth mode, the right
expanded (and, if necessary, contracted) to technology can help gain better economies of
meet the enterprises’ needs. scale and improve throughput with less human
labor. By investing wisely in technology, a
If a distributorship is using Excel spreadsheets distributorship can achieve all of these benefits
to manage inventory; continually finding itself in and more.
© Oracle | Terms of Use and Privacy Page 6“At the end of the day, this is the distributor’s dollars and cents.
Without robust reporting capabilities—and the ability to know
exactly where everything is and at any given time—you’ll just spend
a lot of time chasing that information down instead of focusing on
building your business.” Michelle Davidson, Wholesale Distribution Industry Principal, Oracle NetSuite
Scalable Inventory Management in Action Up next, Navitas plans to enable shipping
Historically reliant on manual inventory companies to input information, such as
processes, Navitas Organics recently digitised the date and time of pickup, lot numbers,
its inventory management approach with quantities, and ship-to locations, directly into
the scalable, cloud-based Oracle NetSuite the NetSuite application.2
application. Based in Novato, Calif., the
The Best Approach: Walk, Crawl, Run
producer of organic “superfoods” can now
During the software selection process, the
track the location of its packaged products and
vendor’s job is to help the customer “walk,
more quickly pick, pack and ship orders.
crawl and then run” in a way that ensures
In the warehouse, workers use handheld good scale for a growing business. Using a
mobile devices to record when they transfer step-by-step approach, distributors will not
products to different bins or pick them to only be building your inventory management
fill orders. “Formerly, we had to do a full approach on a strong foundation, but also
physical count to reconcile our inventory,” setting that system (and company) up for
Navitas’ Greg Hingsbergen told Forbes. future success.
“Now it’s done in real-time.”
In return, distributors gain full visibility into
Inventory was crammed onto warehouse their inventory and the ability to make fast,
shelves (which weren’t designed to accurate decisions regarding the allocation
accommodate pallets), jumbled, and difficult of orders and products.
to manage in terms of first-in/first-out or last-
To get started, Davidson tells distributors to
in/first-out (in relation to expiration dates).
assess where they are right now and where
“Every day was a scramble to get our orders
they want to go.
out,” Hingsbergen said.
Assessing Your Current and
Using Oracle NetSuite’s inventory reporting
Future Requirements
module, Navitas Organics can see if items
As Navitas Organics and many other
are approaching their “best before” date,
companies have learned, finding the right
prompting the company to either offer a
inventory management system requires
promotion or push the products out through
assessing the distributorship’s current needs
one of its distributors.
and its plans for future growth. And while
2
Banks-Louie, Sasha, Superfoods’ Producer Navitas Organics Improves Its Inventory Regimen
© Oracle | Terms of Use and Privacy Page 7“Research the inventory management systems that you have in
place today, and look very carefully at how those solutions will
support your company’s growth going forward. Then, come up with
a plan that incorporates the software that you need now, and what
you’ll need 3-5 years from now to keep your company streamlined,
automated and profitable.” Michelle Davidson, Wholesale Distribution Industry Principal, Oracle NetSuite
predicting the future is never an easy thing, Working through this exercise, distributors
assessing a distributorship’s current status, will have a clear picture of the company’s
identifying any technology gaps and reviewing current inventory management needs and
its future plans can all help set distributors on what it will need in 2019 (and beyond).
the right path.
Getting the Right Products to the Right
Key questions to ask include: Place at the Right Time
Whether a company is just starting out in
1 What are we using right now and how is it
distribution or ready to gain more market
working for us?
share in the field, it will miss the mark if it
Take an honest snapshot (or, bring in an
doesn’t have an efficient, automated inventory
outside consultant or software vendor to
management system to build upon. Not only
provide a third-party opinion) of the current
will the company not be able to scale up, but
inventory management solution and its
it will always be held back by the number of
capabilities. If it’s not working, tell us why—
people it needs to manage all of the manual
what’s missing?
inventory management processes.
2 What are our current solutions’ limitations?
Armed with accurate inventory data that’s
What should be on the “wish list” right
recorded, tracked and optimised with a robust
now if someone asked what the inventory
software suite, distributors can effectively
management solution should handle? With
reduce costs, minimise waste, meet customers’
today’s cloud-based software systems,
expectations and more accurately predict
virtually anything is possible.
future demand. By incorporating automation—
3 What will you need one to five years namely, barcode scanners that enable real-time
from now? updates—inventory management software
Brainstorm with sales and marketing team, also removes the potential for human error and
talk to your warehouse manager and do gives organisations an accurate picture of their
some customer focus groups to figure out inventory status at any given moment.
where the new opportunities are. Taking
Combined, these benefits help firms maximise
advantage of them will mean scaling up the
their profits while minimising their inventory
inventory management approach to meet the
investments. When supported by a scalable,
needs of your growing distributorship.
© Oracle | Terms of Use and Privacy Page 8“A good inventory management system that scales will serve as the framework for your entire business, so don’t try to rush through the selection process. If, for example, you’re smack in the middle of your busy season and unable to devote attention to selecting the right system, then put it on hold until you do have the time.” Michelle Davidson, Wholesale Distribution Industry Principal, Oracle NetSuite cloud-based inventory management solution, About Oracle NetSuite this approach also helps distributors protect For more than 20 years, Oracle NetSuite themselves from fluctuations in demand, has helped organisations grow, scale and reduce the risk of loss, minimise administrative adapt to change. NetSuite provides a suite workloads and avoid ordering duplications. of cloud-based applications, which includes Most importantly, a scalable inventory financials/Enterprise Resource Planning management platform ensures that customers (ERP), HR, professional services automation get their shipments in a timely fashion in and omnichannel commerce, used by more today’s on-demand business world—a must- than 16,000 customers in 203 countries and have for any growing distributorship. dependent territories. © Oracle | Terms of Use and Privacy Page 9
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