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2 Key Ways to Improve Inventory Planning with Analytics

2 Key Ways to Improve Inventory Planning with Analytics

August 16, 2018

I have a habit of collecting old B2B distributor quotes and memorabilia. It’s probably not as hip as collecting stamps or butterflies, but it’s my hobby.

One of my favorites is a poster of the founders of Hughes Supply, impeccably dressed, standing next to a vintage Model TT truck in front of their tiny garage apartment where they started their business in 1928.

The poster caption says, “Harry and Russell Hughes say, ‘You can’t do business out of an empty wagon.’”

It’s a simple and timeless statement. It speaks to a core value proposition for almost all B2B distributors: You need the right amount of in-stock inventory to serve your customers. If the wagon is empty you have nothing to sell.

Even just a few years ago, if you put a better mix of the right in-stock inventory as close to the customer as possible — and did it better than your competition — you would grow sales and take share.  

Really, the only serious competition you had was other B2B distributors in your channel, and the big MRO powerhouses. Your customers would take interest in, and give you credit for, how much inventory you had on hand. It could be a key differentiating service to grow your business.

Your sales team would get customer feedback and contracts, and the customer orders that would drive your stocking decisions. If you were an advanced distributor you would try to enter lost sales or opportunities that your team self-reported at the item level, so you could adjust the system.

Your team would set the min/max at the item level, and your ERP would calculate the reorder points. Then, your talented operational team would just watch their daily reports, and use their years of experience to tweak the inventory model.

Empty WagonThe model was adjusted to meet your company’s acceptable slow moving and stagnant inventory levels to maximize cash flow and ROI.

The stability of the channel and the fact that the technology revolution hadn’t yet hit distribution made these core processes relatively unchanged for decades.  Many B2B distributors are managing their inventory that same way today.

Win More Business

But is it really that simple? Amazon, other etailers and a growing list of B2B distributors who are now selling in multiple distribution channels are creating additional competition for sales.

So, how can you improve your inventory mix to win more business? Today’s best-in-class distributors are using more than just their sales team’s input and only internal measurements and metrics. They are using data from suppliers and customers to help them make better inventory decisions.

Here are two key ways to improve your inventory planning with improved analytics:

1) Work with key supplier-provided analytics. Your supplier partners have been using big data and analytics to improve their inventory positions. As technology has improved, their analytics have become more robust and impactful. Your supplier partners have the analytics to show you what they are selling in your local market, the state and region, to help you find the optimal inventory mix.

They have a broader view of the market with sales data from many B2B distributors. They have data that can easily be integrated into your inventory profile. If you aren’t using their intelligence you are missing an opportunity.

2) Use and improve your customer analytics. Your customers can digitally inform you about lost sales opportunities. It’s not difficult to bring in your e-business data like search history, abondonded carts, and email statistics to see what customers are searching for and not finding. It’s one of the best places to get lost sales data in real time. You can also use outside analytics services to get more accurate estimates on customer purchase potential by product categories. Identifying a customer’s true purchase potential is easier than ever.

At our upcoming MDM Analytics Summit, we will be focusing on Inventory Management Analytics.We will focus on the core metrics for distributors to help you streamline inventory, ensure availability and maximize productivity and profitability.

Improving your analytics with data from customers and supplier partners can improve your inventory position. Then you can really fill the wagon effectively and keep selling.

As always, we value your feedback. Comment below or contact me at

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