While business conditions in most industrial and commercial wholesale distribution markets haven’t sunk to anywhere near the downtrodden levels widely predicted at this time a year ago, product demand remains soft for most.

What’s pressuring distributors today, John Gunderson of Dorn Group, added, was the need for both inventory breadth and depth. Having a wide selection of product SKUs doesn’t mean much if you don’t have the quantities needed to meet simultaneous demand for the same product.

“My first boss used to say that the quickest way for a distributor to go from the penthouse to the outhouse in a local market is to screw up your inventory and not have enough depth,” Gunderson said. “It creates a bad impression, and they (customer) go down the street to fill that order.

To solve this, Dorn detailed, distributors and manufacturers can work together to segment their inventory based on how fast different products move through demand — often in a A-B-C-D format, where As and Bs are faster-moving than Cs and Ds. This helps right-size inventory by measuring levels in both SKU counts and in working capital.

To read more from MDM, view the full article on their website.

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