At a distribution industry meeting recently hosted by Microsoft, a panel of experts in different areas of distribution focused on a key issue: As we emerge from this deep recession, the demand spike is one of the toughest issues to manage. Vendors have cut back on financing, and most banks have tightened asset-based financing. This part of the cycle is the most dangerous for stretched companies who can’t finance demand growth.
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The panelists argued for tighter inventory control and shortened cash-to-cash cycles. There’s no one magic bullet, but rather of combination of company policies, procedures and using technology to optimize inventory levels. The notion of reducing inventory investment through better information is not new, but it has taken on new meaning.
Recently I’m hearing more distributors discuss the viability of the traditional branch-based sales model and its associated costs. Is the traditional hub-and-spoke model still necessary or optimal? Can distributors operate more effectively with sales offices or sales offices with A-item inventory only? We are already starting to see a lot of new approaches and strategies emerge this year as the fight for market share heats up. Every distributor is looking for a leaner model.
The panel included Brent Grover of Evergreen Consulting; Jon Schreibfeder of Effective Inventory Management; Dale Lanham of Lanham Associates; and Bill Harrison of Demand Solutions. It was an interesting mix of distribution industry consultants and supply chain/distribution technology provider perspectives.
