When one of your manufacturers announces a new product line or an improved version of a long-established product line, it’s generally good news because your sales team have new product to sell. In some instances though, that good news can quickly turn into not-so-good news if the manufacturer also announces they’re stopping production of an old product line and won’t take back existing inventory. It also means uploading new products and pricing, which can be time consuming.
What's a distributor to do with existing inventory that’s soon going to be retired? With left-over stock of old product, and a new product launch on the horizon, how do you turn it from a liability into an asset? Distributors are faced with four near-term challenges:
- Uploading new products and pricing.
- What to do with existing inventory of the about-to-be-retired product line.
- How to serve existing customers who still want or need the old product line.
- How to minimize the risk of investing in speculative inventory of the new product line.
New Item Imports and Price Updates
TrulinX enables new item imports and even extensive price updates directly into the TulinX price matrix, which eliminates the need to spend hours manually keying or batch transferring files. New items or an entire catalog can be easily uploaded through the TrulinX Item Import Transaction feature. The updates can be completed prior to the price change with an effective date entered for the updates to take effect.
Inventory Sharing Can Help
Formalized “inventory sharing” among peer wholesaler-distributors through a service such as WarehouseTWO, which is integrated with Tribute’s TrulinX software, can help mitigate the challenges with soon to be retired stock. Inventory sharing is the practice of wholesaler-distributors proactively making their inventories available to peer wholesaler-distributors. Virtually combining the inventories owned by participating distributors results in greater asset and operational efficiency for all. Each participant can serve its customers from a much larger inventory, and its own inventory can be available to a much larger customer base.
Here is how inventory sharing can help:
What to do with existing inventory - As your salespeople successfully migrate existing customers to the new product line, local demand for the old products will decline. By making your remaining inventory available to a network of peer wholesaler-distributors, you are effectively expanding your sales territory beyond its traditional boundaries, perhaps to an entire continent or even the entire world. Formalized inventory sharing with peer wholesaler-distributors can expose your inventory to thousands of additional end customers who might still want to use the old products.
How to serve existing customers who still want or need the old product line - You can leverage inventories of the about-to-be-retired product line from peer wholesaler-distributors. Your peers are likely to own inventory that they are eager to unload, at very attractive prices. Participating in a formalized inventory-sharing network gives you easy access to who has what and at what price.
How to minimize your risk of investing in speculative inventory of the new product line - Whether incentivized (or pressured) by the manufacturer, or motivated by optimistic forecasts by your sales team, you will likely place speculative stock orders for items in the new product line. These are items that your company has never sold before. To minimize the risk of this investment, expose this new inventory to as large of an audience as possible by offering it for sale to peer wholesaler-distributors in a formalized inventory-sharing network. Not all of your peers will place speculative stock orders, and many will scramble to fulfill new backorders from their sales teams. Factory lead time is factory lead time, but your inventory can be available for shipment today. In these cases, end-customer satisfaction should take priority over acquisition cost, allowing you to sell your newly acquired inventory at a profit to a peer wholesaler-distributor.
TrulinX distribution ERP software is fully integrated with WarehouseTWO, which allows distributors to seamlessly retrieve inventory information as orders are entered. The TrulinX Inventory Management feature provides complete visibility company-wide on your items, enabling you to see open orders, available product at branches, pending purchase orders, item transaction history, quantity in external fabrication, and more. It also enables the seamless retrieval of inventory information from distributor members of WarehouseTWO.
Request a demo today to learn more about how TrulinX distribution ERP software can help you better serve your customers when a manufacturer introduces a new product line.
WarehouseTWO, LLC is an independent “inventory-sharing” service created exclusively for durable goods manufacturers and their authorized distributors, and any group of durable goods “peer” wholesaler-distributors, such as members of a buying/marketing group or cooperative.
An earlier version of this post appeared on September 19, 2016, and was written by Mark Tomalonis, Principal, at WarehouseTWO LLC.