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The Benefits of Inventory Sharing

Say you’ve just won the lottery and you’re ready to plunk down some of that hard earned money on your dream car - let’s just use a Ferrari California as an example – and you want a specific color – the dark red Rosso Mugello. You head on over to your local dealer and find that he doesn’t have it on his lot.

However, that’s not going to stop the dealer from relieving you of a portion of your new found wealth; he can quickly and easily find exactly what you’re looking for by searching the database of all available cars at Ferrari dealers across the country.

Car dealers can do that. How can independently owned wholesaler-distributors emulate that system for their inventory needs? By utilizing Inventory-Sharing.

What is Inventory-Sharing?

“Inventory-Sharing” is formal collaboration of a manufacturer and its franchised wholesaler-distributors. Separate collections of inventory are virtually combined, increasing channel efficiency. Demand by one party is fulfilled by available inventory owned by another party. Inventory-sharing is more than dumping dead inventory or living off others’ inventory investment - it is true synergy between peer wholesaler-distributors. For many independent wholesaler distributors, inventory-sharing can be a game-changer.

Win-Win-Win

Inventory-sharing benefits manufacturers, wholesaler-distributors and end-customers.

Benefits for a manufacturer:

  • Improved brand reputation because of better product availability throughout the distribution channel
  • Increased manufacturing efficiency due to fewer small quantity manufacturing runs and expedited delivery crises
  • Reduction in unwanted inventory in the distribution channel, reducing the pressure to take it back and improving the financial health of the distribution channel

Benefits for a distributor:

  • Fewer lost orders and backorders, increasing revenue and decreasing open order management time and costs
  • Outlet for slow moving inventory for improved asset recovery and financial health
  • Opportunity for incremental revenue from sales to like-franchised distributors

Benefits for customers:

  • Improved product availability from a local source, reducing PO fulfillment delays and open PO management costs

WarehouseTWO Expands Beyond Original Scope

Since the creation of WarehouseTWO for its target group, other manufacturers and their communities of like-franchised distributors have discovered this easy-to-deploy tool. The Eaton Hydraulics division uses WarehouseTWO as their inventory sharing solutions between their distributors. Obviously, an inventory-sharing tool is of great benefit to these distributors.

Keys to Successful Inventory-Sharing

Successful inventory-sharing depends on getting to “critical mass” within a community of peer wholesaler-distributors. Factors that influence getting to “critical mass” include:

  • Commitment by you to build your community to “critical mass” (i.e., active participation by multiple peer distributors within a franchise, buying group or trade association community)
  • Active involvement by the manufacturer, or buying group, or trade association
  • Inventory posted by at least five peer distributors; the more, the better
  • Automated inventory postings; the more current the data is, the better
  • Change in behavior among participants’ customer service / inside sales people; they must view backorders as something to fill quickly, by searching for available inventory among participating peer distributors
  • Change in behavior among participants’ purchasing / inventory control people; use of WarehouseTWO’s “BARGAIN HUNT” feature to purchase stock items at distress sale prices
  • Inventory-sharing as a standing topic at distributor advisory council meetings
  • Expansion of inventory-sharing activity to multiple product lines and peer distributor communities

Not sure if inventory-sharing is viable for your company? WarehouseTWO has come up with a list of “eligibility factors” for you to consider. The more that apply to your business, the more you can gain from formalized inventory-sharing. Click link to see a list of WarehouseTWO inventory sharing communities.

Tribute, Inc. Partners with WarehouseTWO to Expand Inventory Options

Tribute, Inc., an ERP business management software provider for industrial distributors, has partnered with WarehouseTWO and has integrated WarehouseTWO software with the Tribute and TrulinX software packages. Mutual customers can easily search WarehouseTWO inventory while in the TrulinX software system as if it is another location of their company. CSRs can easily see if there's inventory through WarehouseTWO on the same inventory inquiry screen, ensuring the best solutions for their customers. 

Think outside your box!
For more information on WarehouseTWO and successful inventory-sharing contact Mark Tomalonis, Principal at WarehouseTWO at www.warehousetwo.com or contact Jeff Waite, Customer Relationship Manager, at Tribute, Inc. For more information about TrulinX software by Tribute, Inc. visit www.tribute.com

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Tribute, Inc. is a provider of ERP business management software for distributors and system integrators in the fluid power, hose, motion control, automation, fluid handling & pump industry who provide value-added services.