In a joint survey between Modern Distribution Management and Sikich, industrial distributors larger than $100 million recently rated their inventory management practices and shared their own challenges and concerns.
Just 19% said their inventory situation was “much better” in 2023 than a year ago. More than 46% said it was “slightly better.”
Real-time Data Plays a Critical Role
For distributors that want to successfully navigate this next phase, real-time data must play a critical role.
Thirty-three percent of distributors wish they had better end-to-end real-time visibility
Many want that visibility in the form of easy-to-access dashboards.
Other features they wish they had:
- Demand and supply planning/forecasting
- Staff-wide access to distribution center operations
- Greater automation
- Advanced notice for missing delivery dates
- The ability to track lost sales
Inventory Visibility for Distributors
So, how well can distributors in the survey see into their inventory? Respondents were fairly optimistic.
- 6% Excellent
- 47% Good
- 18% Fair
- 6% Poor
Just 2/3 said their inventory was 95%-100% accurate.
Inventory Management Practices
Most distributors saw room for improvement in their inventory management practices.
Seventy-two percent said, “We are doing OK overall, but we could be doing better.”
Fill Rate Statistics
Fill rates—the percentage of orders shipped from available stock without lost sales, backorders or stockouts—varied greatly across respondents.
- 21% had fill rates between 95% and 100%
- 24% had fill rates between 90% and 94.9%
- The rest fell under 90%
“We saw a significant drop in overall fill rate, as many manufacturers limited the number of SKUs they were manufacturing.”
Predicting the Future Inventory Outlook
Most distributors believed their inventory situation will be better in six months. What factor is most concerning in 2023 and beyond?
- Supply chain/sourcing: 26.1%
- Inflation/Pricing: 24.6%
- Product Demand: 21.7%
- Labor: 13%
- Customer Expectations: 10.1%
Benefits of the Right Tech
To gain the visibility and agility they need to manage today, distributors need the right technology tools.
- Greater forecast accuracy
- Better visibility into inventory performance
- Clearer line to suppliers
- Better tracking capabilities
- Removal of data siloes
- The right technology partner, with industry expertise
Distributors are resilient. With a focus on strategies and tools that can drive better inventory management, you can grow even stronger. Contact us to discuss the right tools and technology to support you into the future.