by Ryan Pratt on Nov 20, 2015 |
Your job is challenging enough with the issues that are clearly visible. The catch is defining and relieving the hidden costs. Let's start with the normal view of your supply chain. A typical supply chain includes at least 4 processes that you must successfully manage to achieve customer satisfaction: Sourcing/Purchasing, Logistics/Warehousing, Packaging/Preparation, Replenishment. Within each of these processes, there are inherent risks and costs that can burden your profitability without adding value to your product: Overcommiting to inventory, Under planning for vendor delivery issues, Difficulty in allocating storage space, Limited capability for custom packaging, and Price sensitivity from fluctuating purchased quantities.
Decrease Risk by Involving the Master Distributor
It is possible to minimize your exposure to risk and reduce your overall costs by building a relationship with a Master Distributor. With a trustworthy and transparent relationship in place, many of the risks and costs assumed within your supply chain can be shared with your partner. The costs removed are often not considered during the initial bidding process, but left uncovered can directly impact your ability to make a consistent profit.
Increase Speed and Profitability
You can cut weeks (yes, weeks) of lead time out of your supply chain and improve your replenishing speed and accuracy by working with your Master Distributor to stock appropriate quantities of product and package the parts in increments your customers need.
Time is a resource that can never be recovered. Working with a Master Distributor will give you the time you need to increase your performance and profitability.
Unknown or Untracked Costs Become Known Costs
An organization that can leverage a relationship with a Master Distributor can reduce the number of cost centers to be managed, making cost identification and containment a simpler and more valuable tool.
A supply chain is only as strong as its hidden links. Hidden links are more vulnerable to cost overruns. Relieve your hidden costs and your stress by working with a Master Distributor.
by Ryan Pratt on Nov 20, 2015 |
SHOULD MASTER DISTRIBUTORS MAINTAIN INVENTORY?
If you depend on your Master Distributors to help your business build sales, revenue, and profit, a surprisingly simple question can be the difference to discover if you have a profitable relationship:
Does your Master Distributor maintain inventory for you?
It’s a big question. In fact, inventory can be the largest cost of manufacturing and sales.
Inventory costs you more than you think.
It costs you more to manage the inventory than you realize. Do you have enough product in stock? Have you purchased too much? Who manages it? How many inventory managers do you employ? How much time and energy of your company is focused on managing your inventory?
These questions are just the beginning. You also have to add inventory insurance and taxes. Taking inventory of your actual or real inventory costs can be surprising. It can also be the difference between profit and loss.
If your Master Distributor maintains inventory, you will never be sold out. Sold out equals lost opportunity on the present sale and on future sales. Sold out means lost out.
On the other hand, you won’t have to buy product that you don’t need. This is one commitment you can, and should, avoid.
The key benefit of a Master Distributor is their ability to add value. That value is created by maintaining approved manufacturers inventory and distributing it at customer-friendly prices in a timely fashion. Without maintaining an inventory, the true status of a distributor is not that of a Master Distributor. A distributor that does not hold stock for you on-hand is simply adding layers… not adding value.
By maintaining inventory, your Master Distributor eliminates risk and frees up capital. This superior customer service is critical in today’s ultra-competitive marketplace. You will be able to serve your customers better when you are served by a Master Distributor that manages inventory for you.
With all the value that a Master Distributor can add by maintaining inventory for you, there really isn’t a question of whether your Master Distributor should maintain inventory for you.
Without question, a true Master Distributor does maintain inventory and distributes value.