It’s every warehouse distributors’ goal: Have the right part in the right place at the right time. Sold, of course, at the right price.
Achieving that goal requires balance between inventory and demand. It’s the foundation for customer satisfaction and profitability, and it requires considerable supply channel communication and logistical complexity.
Technology has played a pivotal role in the evolution of inventory management. Gone are the days of tracking product and determining reorders by shuffling through a bin of index cards. But equally important has been a shift in the philosophy behind inventory management.
At one time, “there was comfort in walking through the warehouse and seeing those pallet racks loaded to the ceiling,” said Jay Pagano, VIPAR Heavy Duty director of business development. “Today, one can walk through that warehouse and having those pallet racks loaded to the ceiling doesn’t mean the same thing. That asset is now a liability. It’s just a cost staring at you.”
For most distributors, inventory is their second biggest investment, next to the warehouse space itself. Knowing when that asset becomes a financial liability is critical.
“There was a time in the 1970s and 80s when you could have huge inventories and always have everything in stock and still make money,” said John Flad, Bendix Commercial Vehicle Systems’ vice president of aftermarket sales. “God knows those days are long gone. Now you really have to be efficient with inventory management.”
Striking the balance
There is no magic formula for the ideal inventory breadth and depth. Every store has it own unique needs influenced by market conditions. Customer mix, geography, seasons and even legislation all drive product demand. Factor in the ever-fluctuating dynamics of the trucking economy, and even the best analysis can become guesswork.
