Wholesale distribution, more so than any other industry segment, is caught in a profitability squeeze between suppliers and customers. Given the narrow margins, the ability to optimize inventory levels as a way to reduce costs and improve customer service has been a major focus in recent years. Effective inventory management is essential for a distribution business to succeed. However, finding the balance between the right inventory level and customer service requirements is not always easy.
The Link Between Inventory Management and Customer Service
The smooth operation of inventory management processes has a significant impact on customer satisfaction. Good inventory control means that orders are filled quickly and efficiently. The availability of inventory is a major factor in customer service satisfaction.
Customers are demanding more customer service throughout the supply chain. Firms with high customer service levels gain a competitive advantage over those that do not have the supply chain capabilities in place or the ability to manage them.
Companies who understand their demand, recognize stockout costs and carry appropriate levels of inventory are ultimately better able to effectively manage inventory and provide service level to customers. Good supply chain management boosts your company’s customer service by allowing you to do three things:
- Deliver products to customers faster and with greater accuracy.
- Track shipments to ensure they reach their destination safely.
- Maintain optimal inventory levels so you always have what customers want in stock.
The Role of Technology
A good inventory management system can help you ensure that you have an up-to-date inventory counts at all times. Part of giving good customer service is giving accurate information even if the customer does not plan on making a purchase that day.
A well-designed inventory management system can reduce the amount of time that products sit on your shelves. By getting the right balance of inventory you can pass these savings on to client in the form of lower pricing.
Proper inventory management practices help to build strong relationships with your customers. If you consistently fulfill your promises and exceed expectations, your customers will be much more likely to keep coming back to you. As economic conditions improve and consumers cautiously increase their spending, you can put yourself in an ideal position by optimizing your inventory management.
If you need help optimizing your inventory management or assessing your process and practices, download our whitepaper, Inventory Management’s Role in Customer Service, or contact us for more information.