The State of Inventory Management for Distributors in 2023

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.”

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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.

Look for:

  • 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

See this info visually represented in this infographic:

inventory management infographic 2023

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.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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