“We need to accurately reduce buying of that SKU at exactly the right time so we are not stuck with excess product."
Marietta, GA (PRWEB) October 24, 2014
Distribution companies that sell to large store (‘big box’) retailers like Home Depot, Menards, Walmart often struggle to manage inventory profitably for these large customers. Expectations from the customer are that the inventory will be available whenever the customer needs it. Because of the amount of volume these customers create, distribution companies are often obligated by contract to maintain high ‘service levels’ or in-stock percentages, but have very little in terms of automated systems to support this compliance.
One example of a specific challenge that distributors face is when a big box retailer wants to discontinue an item for a market region, or introduce a new item to a different region. If the retailer constitutes a large percentage of volume for this item for the distribution (which is often the case), the impact of discontinuing or adding an item to a region is very significant, especially in the area of inventory forecasting and proper planning of inventory levels for that item.
“Home Depot can tell us they are discontinuing one of our SKU’s for a region 6 months from now,” states Bill Underwood, CEO of LDR, a leading distributor of plumbing products. “We need to accurately reduce buying of that SKU at exactly the right time so we are not stuck with excess product. At the same time, if Walmart is rolling out one of our SKU’s to a region with 500 stores in 4 months, we need to know how much to buy of that SKU at the right time to get it into our stock and be available to ship to those Walmart DC’s so they have it at the right time for their stores.”
Typically, distributors have struggled to comply with their service and fill rate agreements due to the complexities of planning in advance and properly calculating the right quantities and timing of each SKU. Distributors often lose profitability due to the expensive costs of expediting product and/or having excess inventory that may be difficult to sell to other customers. Due to the sheer amount of data that must be analyzed across tens of thousands of stocked items at the customer level, traditional ERP systems are not able to provide guidance in this area.
But today there are cloud based systems that can easily handle the volume, have very sophisticated mathematical science and predictive analytics, and specific functionality to accommodate distribution companies’ need to service their big box customers.
New functionality in the inventory forecasting software from Thrive Technologies (http://www.thrivetech.com) leverages the processing power in the cloud to quickly process data across millions of SKU’s. “We have a patent pending forecast engine that can very accurately predict demand for each item,” states Rick Morris, CEO of Thrive. “Since we analyze demand at the customer level for each item, our clients can specify the exact date that one of their big retail customers will be adding or discontinuing an item in certain locations in the future. Our system automatically adjusts the forecasts accordingly as well as the inventory buying plan so that stock is aligned accurately with demand at that time. Due to the volume these big box retailers have with their vendors, this significantly improves the profitability of doing business with these retailers as well as preserving high customer satisfaction and ensuring they have the product in stock their customers want to buy.”
“Thrive’s inventory forecasting software allows us to put in dates by item, warehouse, customer, and customer warehouse,” comments Michelle Libertore, Purchasing Manager for LDR. “Then the system automatically adjusts our demand and forecasts appropriately at the time we would be ordering for that future demand to ensure our orders take into consideration those large additions or reductions in demand.”
Thrive is a cloud-based, SaaS (Software as a Service) provider. They operate on a secure private cloud and can interface with nearly all ERP systems, regardless of platform (Windows Server, Unix, iSeries, etc.). Thrive works with wholesalers and master distributors in industries such as pipes / valves / fittings (PVF), HVAC, electrical, industrial supplies, consumer goods, plumbing, building supplies, and liquor / wines. Clients include Matco-Norca, General Air Service, Virginia ABC Stores, and Chiquita Brands.
About Thrive Technologies
Thrive Technologies is the leading provider of cloud based demand forecasting, cloud based inventory replenishment and inventory performance software to SKU intensive businesses. Thrive’s award winning systems increase inventory profitability for wholesale distributors and retailers through industry leading forecast accuracy combined with a unique inventory ‘nervous system’ that dynamically adjusts SKU level inventory based on recent activity, orders and strategic goals. Based on their supply chain goals, Thrive clients monitor their continual and self evident improvement in inventory performance. Supported by Thrive’s long term partnership approach and deep domain expertise, Thrive’s clients achieve a 90 day return on investment and lasting improvements to profitability and competitive advantage. For more information, please visit Thrive on the Web at http://www.thrivetech.com.