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Distributors are slimming down.
The sudden drop in sales in November left many distributors with too much inventory and not enough demand. Maximizing cash flow has become the name of the game. To do this, distributors are paring down and better managing inventory. They are shortening their forecasting time frame (to consider just the past three months rather than the past half year or more), analyzing their replenishment processes (in many cases ordering more frequently), improving communication with vendors and returning to basic best practices in inventory management. Many are also digging more deeply into their technology tools to find ways to increase efficiencies in the inventory management process.
But while many distributors are focusing on reducing inventory to match decreased demand, some distributors who offer inventory management services to their customers, such as vendor managed inventory and integrated supply services, expect relatively strong performance this year. In this uncertain climate, opportunities exist to partner with customers who are also looking to improve efficiencies and cash flow.
In the most recent issue of MDM, found here, distributors and inventory management expert Jon Schreibfeder provide a look into best practices and current trends in inventory management in the current down economy. Read that article: Inventory Reductions On Tap. "