Tactics Wholesalers Must Adapt to Produce More For Less While Maintaining An Attractive Profit Margin

Americans plan to spend nearly 69 billion dollars this year on back-to-school necessities, including everything from apparel to footwear to electronics, according to the National Retail Federation (NRF). Four out of 10 college shoppers and three in 10 K-12th grade shoppers with smartphones and tablets plan to use their devices to purchase these products. While these numbers are impressive and a sign that people are willing to spend money in return for a good bargain, shoppers are not looking to burn a hole in their wallets. The NRF expects back-to-school sales to be flat as shoppers monitor their spending and, more than ever, look to take advantage of discounts.

What does all this mean to the wholesaler? Demand for inventory is up; however, due to our economic climate, wholesalers need to provide it at a lower cost to customers. Thus, wholesalers must be more efficient in servicing their customers and need to be prepared to operate in a radically different environment from previous years. They must streamline their operations to eliminate costly errors, monitor their finances more closely, and be strategic and smart about they way they operate their businesses.

So how do wholesalers produce more for less, while still maintaining an attractive profit margin? There are three key tactics that wholesalers should adopt and implement in effort to make their firms operate successfully and provide a level of service that will leave customers satisfied, especially during the busy shopping season.

#1:  Wholesalers Must Improve Decision-Making by Better Understanding Their Customers’ Needs


Changing economic times means new customer-buying habits. Rather than making buying decisions based on loyalty or long relationships with wholesalers, many customers are making their decisions based on the cash they have on-hand. This means they are much more likely to seek out the supplier with the lowest prices. They are also more likely to buy from suppliers that can handle the changes in their orders mentioned previously – fewer quantities ordered more frequently.

Why the emphasis on good customers? Because in the short-term, good customers are like good inventory. Their orders don’t put undue constraints on a wholesaler’s budget and they create revenue and profits for the wholesalers without leeching out expenses. However, there are some customers that drive up costs or are expensive to retain because of the nature of what they require. Analytics tools allow wholesalers to make those determinations and make smarter decisions, which has a positive effect on costs and expenses.

#2: Wholesalers Must Be Ready To Integrate New Technologies into Their Warehouses

It’s imperative that wholesalers use devices and solutions that eliminate waste, reduce risk and streamline processes. This includes solutions such as barcode scanning, voice picking, RFID, and of course, ERP software. These solutions are all being used by mid-sized wholesalers to take advantage of productivity gains and reduced costs. Additionally, wholesalers must be open to offering their goods to customers through applications that can be viewed on smartphones and tablets.

Voice picking systems are a good example of a technology growing in popularity due to a 99-percent accuracy rate. Some companies have changed their procedures for efficiencies by requiring personnel to accomplish more in the same time, such as performing different picking methods. Cross docking is another way wholesalers can save time and resources by utilizing scanning and new WMS software, eliminating the need to perform put-a-ways and picks.

Companies have incorporated an additional step in the process – verification of goods going on the shipment. While this seems to increase time and efficiencies, the reality is that it helps eliminate incorrect products going out the door and saves on material returns and processing. These types of steps will help with being more efficient overall and provides a better purchasing experience for customers.

Another key technology for warehouses is the RFID device, which enables real-time accounting of inventory. Using these devices optimizes the routes of forklifts, and can be used to trigger the replenishment of picking faces and even prevent waiting for inventory to become available. It decreases the amount of paperwork, ultimately helping decrease careless errors, which can become costly and largely effect wholesalers’ bottom line.

And finally, you’ll need a central management system that can integrate all your solutions and devices to effectively and efficiently streamline warehouse management processes. This is where an integrated ERP solution comes in – all the devices in the world won’t help improve the bottom line if you still rely on manual processes to manage inventory and gut instincts to predict customer purchasing behaviors.

#3: Wholesalers Must Focus on Efficiency

Inventory management is expensive. There are not only the costs of storing it, but there are also the costs of receiving it, picking and packing it and transporting it. With so many tasks involved in this process, inefficiencies are bound to occur. In the past, wholesalers could use strong sales to hide inefficiencies but that is not the case today. Inefficiencies must be eliminated. At the same time, wholesalers must be ready to make adjustments in logistics as customers place more orders more frequently yet in smaller quantities. By getting smarter about the warehouse environment and adapting to the new realities of the supply chain, wholesalers can act with new agility to take on today’s market demands and avoid past mistakes.


Note: The inclusion of guest posts on the Panorama website does not imply endorsement of any specific product or service. Panorama is, and always will remain, completely independent and vendor-neutral.

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