Top 5 Problems Facing Distributors and Small Manufacturers
Small growing companies—both distributors and manufacturers—are facing many challenges through their day-to-day operations. They find themselves caught up in the midst of manual or disconnected processes, information delays, excess inventory, and purchasing information that’s locked in the minds of individual employees.
To keep growing, a company needs to improve its processes along with their bottom line. Does your company face any of the following 5 challenges that today’s distributors and small manufacturers do?
Challenge 1 – Balance inventory levels and inventory control
Many times distributors find themselves with a lack of inventory that causes them to rush order from their vendors. This situation creates expensive shipping fees as well as tension with business partners – vendors and customers. On the other hand, maintaining high levels of inventory is killing the company’s cash flow and increase warehouse management expenses.
Maintaining low inventory levels and to create a “Just in time” (JIT) paradigm is easy to say but very hard to execute, especially with antiquated inventory tracking systems. In addition, satisfying diverse customers often requires providing custom products and packaging. A growing number of items and SKUs can add complexity and cost to inventory management.
Challenge 2 – Maintain a high level of customer satisfaction
Engaging with a customer is always an opportunity to learn more about their needs and be able to deliver better products and services. The challenge is to be able to share this information between different employees in the organization and to be able to get 360 degrees of visibility as soon as the customer engagement happens. In many cases, it takes a while to pull out the history file of the customer, to be able to identify his or her needs, and then to get a clear understanding of inventory availability and delivery times. This takes a lot of effort from different employees in the company and affects the company’s ability to maintain high levels of customer service and customer satisfaction.
Challenge 3 – Increase cash flow and visibility to financial information
It is crucial for a company to have a clear understanding of their cash flow so they can make quick decisions based on real-time information. Having relatively high inventory levels ensures that the company has enough inventory to handle the demand, but it means that a big part of the company’s cash is sitting in the warehouse. In addition to understanding the inventory value, producing accurate financial reports for banks, owners, and investors is always a task that takes a lot of time and manpower of employees that have other pressing duties as well.
Challenge 4 – Purchasing and production planning
Production or purchasing planning is the plan for production to obtain the best optimization of inventory, resource utilization, and customer satisfaction. In many cases, it’s a complex process that covers a wide variety of activities and can be performed only by top tier employees.
That task becomes more challenging when lead times are long and when the future is unclear and does not resemble the past. Companies need an optimal sourcing plan that takes into account inventory, demand priorities, cost and time constraints.
Challenge 5 – Grow the company and win more opportunities
Building and managing a sales pipeline can be critical to a small business’s success. Even in good economic times, sales management can be difficult and managers will face many challenges throughout.
In more businesses than not, salespeople will be overly-optimistic about their pipeline specifically when they are not trained to manage critical pieces of information e.g. prospect budget, length of sale cycle, etc. In many cases the sales force will spend too much time writing proposals for unqualified leads, trusting all too confident that the deals will close any day.
In addition, every company should consistently measure the factors that turn leads into sales. By not doing that, the company is shooting in the dark. Owners and their salespeople need to spend more time with high-quality leads to stimulate or perpetuate growth.
In the next article, I will write about some of the best solutions in the ERP market that can resolve some of those challenges. Please follow us on Facebook, Twitter, and LinkedIn to receive the most up to date News.
Pioneer B1 has been helping distributors and small manufacturers overcome these challenges with proven technology. Click here to see a short demo of a solution that shouldn’t be ignored and read more about all the major solutions available to companies through Pioneer B1.Oren Tabib
President – Pioneer B1