An HVAC wholesaler in the Midwest receives an unusual order.

One of their clients—a large regional hospital—has ordered 100 units of a specific filter. This particular SKU typically only sells five times per year to small contractors and HVAC repair technicians. 

A little digging reveals the reason for this large order. The hospital is undergoing a major facility-wide air quality upgrade project, hence the need for 100 new filters. This is a grant-funded initiative that won’t be repeated.

We call this an exceptional sale. 

Now, this HVAC supplier has an outlier order in its ERP, folding this one-time spike into the order history for a normally low-selling SKU. It will now automatically forecast the need for 20 filters each month instead of the usual five, setting them up for overstock unless it’s caught and manually adjusted by a buyer. 

This example shows how one-time project spikes can skew ERP demand forecasts in wholesale distribution, leaving companies to rely on manual intervention—which is prone to human error and inefficiency.

Why Demand Cleansing Matters

​​Inventory management relies on being able to forecast upcoming sales based on historical sales. If the spike from a one-time project is not removed from inventory data, future forecasts in their ERP will read that as normal, leading to overstock. 

By cleansing the unusual demand, the ERP system would:

• Identify the spike as an anomaly (based on historical patterns)
• Adjust the forecast downward
• Maintain optimal stock levels

While this is just one example, exceptional sales can happen with any SKU at any time. Research conducted by ThriveAI shows that the average number of SKUs that experience exceptional sales ranges from 5-27% annually. ERP systems allow users to manually identify and flag these exceptional sales to be excluded. However, wholesalers have tens of thousands of SKUs, making this manual process impossible to maintain.  

ThriveAI is every wholesaler’s solution to ensuring that exceptional sales are identified and removed from inventory data, reducing the likelihood of overstocking. It automatically identifies and excludes exceptional sales, which efficiently and accurately bring down excess inventory based on anomalous sales.

This process is called demand cleansing, which in the context of wholesale distribution inventory management, refers to the process of refining and filtering historical demand data to ensure it accurately reflects true customer demand. The goal is to remove anomalies caused by exceptional sales so that forecasts and inventory decisions are more accurate.

In wholesale distribution, demand data can be misleading due to:

• Stockouts (which underreport actual demand)
• One-time bulk orders or promotions (which overstate typical demand)
• Returns or cancellations
• Manual data entry errors
• Demand spikes from panic buying, weather events, or economic disruptions

Using unclean data leads to poor inventory planning: too much stock (increased carrying costs) or too little (lost sales and customer dissatisfaction).

Key Components of Demand Cleansing

1. Remove Nonrecurring Promotional or Abnormal Orders
   • Large or irregular orders may skew demand. Cleansing separates baseline demand from promotional lift or one-time spikes.
     
     
2. Handle Returns and Cancellations
   • These are removed or corrected to reflect net demand.
     
     
3. Filter Data Entry Errors
   • Obvious outliers from mistaken entries (e.g., an order for 1,000 units instead of 100) are identified and corrected.
     
     
4. Normalize Seasonality and Trends
   • Demand may need adjustment to account for consistent seasonal patterns or long-term trends, helping isolate "clean" baseline demand.

With wholesalers stocking tens of thousands of SKUs, tackling the demand cleansing process manually isn’t feasible. However, it’s critical to ensure that exceptional sales don’t live inside your ERP system, leading to overstock when the same sales volume isn’t reached in the future.  

Talk to the team at Thrive Technologies about how its AI solutions can easily recognize exceptional sales and work alongside your ERP to automatically cleanse them.